Kathmandu, Nov. 10 -- Nepal's economy is facing growing pressure as business confidence has sharply declined following the Gen Z protests, resulting in sluggish lending and weakened private sector morale.

Nearly Rs 1.1 trillion remains idle in the banking system due to limited credit expansion since the protests, leading to excess loanable funds but demand and investment confidence. The demonstrations triggered fear among investors, causing business sentiment to fall and raising concerns of capital flight.

The World Bank's latest report has projected Nepal's economic growth to remain limited to 3.1 percent this fiscal year, down from an earlier estimate of 5.2 percent, citing damages from the protests and subsequent political instabilit...