The Asian Development Bank (ADB) has projected that Nepal's economy could grow 6.2 per cent in the fiscal year 2016-17.

The ADB on Tuesday attributed the growth to a bumper agricultural output, possibility of a pick-up in post-earthquake reconstruction and an improving investment climate, Xinhua news agency reported.

In its half-yearly "Macro-Economic Update Report", the ADB said Nepal's economy would grow between 5.2 and 6.2 per cent this fiscal year ending mid-July.

The Himalayan nation's economy grew 0.7 per cent last fiscal year, a 14-year low, due to trade blockade by India and the impact of deadly earthquake in April 2015.

If the projected upper limit of the economic growth is achieved, it will be the highest growth in the last 22 years.

Nepal witnessed a high growth in 1993-94 when the country initiated massive legal reforms towards market economy.

In that fiscal year, Nepal's economic growth was 7.6 per cent, the highest ever over the previous 26 years, according to Finance Ministry statistics.

The ADB, which had projected Nepal's economy to grow by just 4.8 per cent in August last year, said it made the upward revision in growth due to better outlook for agriculture and industrial sectors.

The higher forecast is based on the assumptions of a stronger-than-expected agricultural output growth and political situation as local election approaches, said Kenichi Yokoyama, ADB director for Nepal.

Nepal will hold local election on May 14 for the first time in 19 years.

The above average monsoon rains and the smooth availability of agricultural inputs, particularly chemical fertilizers, are likely to significantly boost agricultural output, according to the ADB.

Preliminary estimates by Nepal's Ministry of Agriculture Development show a 21.7 per cent increase in paddy output this fiscal year.

Similarly, maize, millet and buckwheat are projected to grow by 1.2 each and 1.4 per cent respectively.

Likewise, notable improvement in power supply and the resumption of manufacturing activities following a lull after the 2015 earthquakes and the supplies disruption in 2016, will underpin a robust manufacturing sector growth, the ADB said.