Economy of Nepal

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Economy of Nepal

Kathmandu, the financial centre of Nepal

Currency Nepalese rupee (NPR, रू)

Fiscal year 16 July - 15 July

Trade organizations WTO, SCO and SAFTA

Country group Developing/Emerging[1]

Lower-middle income economy[2]

Statistics

Population  30,102,211 (2022)[3]

GDP  $41.7 billion (nominal, 2022 est)[4]

 $141.1 billion (PPP, 2022 est)[4]

GDP growth -2.4% (19/20), 4.2% (20/21f)
 5.8% (21/22f), 5.1% (2022/23f) [5]
GDP per capita  $1,372 (nominal, 2022 est.)[4]

 $4,700 (PPP, 2022 est.)[4]

GDP by sector Agriculture: 24.5%

Industry: 13.7%

Services: 61.8%

(2022 est.)[6]
Inflation (CPI) 7.28%(2021)[4]
Population 13.8% (2022)[7]
below poverty line
18.3% on less than $3.20/day (2022)[8]
Gini coefficient 32.8 medium (2010)[9]
Human Development  0.602 medium (2022)[10] (142nd)
Index
 0.448 low IHDI (2019)[11]
Labour force  16,016,973 (2020)[12]

semi skilled labor[6]

76.2% employment rate (2020)[13]

Labour force by agriculture: 43.1%
occupation
industry: 21.24%

services: 35.66%

(2020)[6]

Unemployment 1.47% (2020)[6]

Main industries tourism, carpets, textiles; small rice, jute, sugar, and oilseed

mills; cigarettes, cement and brick production[6]

Ease-of-doing-business  94th (easy, 2020)[14]
rank

External

Exports  $2.69 billion (2021)[6]

Export goods clothing, pulses, carpets, textiles, juice, jute goods[6]
Main export partners  India(+) 53.1%

 United States(+) 11.8%

 Turkey(+) 9.2%

(2020)[6]

Imports  $15.17 billion (2021)[6]

Import goods petroleum products, machinery and equipment, gold,

electrical goods, medicine[6]

Main import partners  India(+) 68.03%(2021est.)
  China(-) 31.97%(2021est.)

(2017)[6]
FDI stock $20 billion (31 July 2013 est.)[6]

Abroad: NA[6]
Current account  −$68 million (2020)[6]
Gross external debt  $11 billion (31 December 2020)[6]

Public finances
Public debt  41.38% of GDP (2021/22)[15]
Budget balance −1% (of GDP) (2022 est.)[6]

Revenues 10.925 billion (2017 est.)[6]

Expenses 15.945 billion (2017 est.)[6]

Foreign reserves  $9.82 billion (Dec 2022)[16]

Main data source: CIA World Fact Book

All values, unless otherwise stated, are in US dollars.

The economy of Nepal is developing category and largely dependent

on agriculture and remittances.[6] An isolated, agrarian society until the mid-20th
century, Nepal entered the modern era in 1951 without schools, hospitals,
roads, telecommunications, electric power, industry, or civil service. The country has,
however, made progress toward sustainable economic growth since the 1950s. The
country was opened to economic liberalization, leading to economic growth and
improvement in living standards when compared to the past. The biggest challenges
faced by the country in achieving higher economic development are the frequent
changes in political leadership, as well as corruption.
Nepal has used a series of five-year plans in an attempt to make progress in economic
development. It completed its ninth economic development plan in 2002; its currency
has been made convertible, and 17 state enterprises have been privatised. Foreign aid
to Nepal accounts for more than half of the development budget. Government priorities
over the years have been the development of transportation and communication
facilities, agriculture, and industry. Since 1975, improved government administration
and rural development efforts have been emphasised.
Agriculture remains Nepal's principal economic activity, employing about 65% of the
population and providing 31.7% of GDP. Only about 20% of the total area is cultivable;
another 40.7% is forested (i.e., covered by shrubs, pastureland and forest); most of the
rest is mountainous. Fruits and vegetables (apples, pears, tomatoes, various salads,
peach, nectarine, potatoes), as well as rice and wheat are the main food crops. The
lowland Terai region produces an agricultural surplus, part of which supplies the food-
deficient hill areas.
GDP is heavily dependent on remittances (9.1%) of foreign workers. Subsequently,
economic development in social services and infrastructure in Nepal has not made
dramatic progress. A countrywide primary education system is under development,
and Tribhuvan University has several campuses. Although eradication efforts
 continue, malaria had been controlled in the fertile but previously uninhabitable Terai
region in the south. Kathmandu is linked to India and nearby hill regions by road and an
expanding highway network. The capital was almost out of fuel and supplies, due to a
crippling general strike in southern Nepal on 17 February 2008. [17]
Major towns are connected to the capital by telephone and domestic air services. The
export-oriented carpet and garment industries have grown rapidly in recent years.
Together, they account for approximately 70% of the country's merchandise exports.
The Cost of Living Index in Nepal is comparatively lower than many countries but not
the least. The quality of life has declined to a much less desirous value in recent years.
[18]
 In the 2021 Global Hunger Index, Nepal ranks 76th out of the 116 countries with
sufficient data to calculate 2021 GHI scores. With a score of 19.1, Nepal has a level of
hunger that is moderate.[19]

Contents

 1Foreign investments and taxation

 2Imports and exports
 3Resources
 4Macro-economic trend
 5Statistics
 6See also
 7References
 8External links

Foreign investments and taxation[edit]

Huge numbers of Small Foreign Investments come to Nepal via the Non Resident
Nepali, who are investing in many sectors. Nepal has a huge potential for
hydroelectricity. Accordingly, a large number of foreign companies are willing to invest
in Nepal, but political instability has stopped the process. Nepal has entered into
agreements for avoidance of double taxation (all in credit method) with 10 countries
(PSRD) since 2000. Similarly, it has Investment protection agreements with 5 countries
(PSRD) since 1983. In 2014, Nepal restricted the Foreign aid by setting a minimum limit
for foreign grants, soft and commercial loans from its development partners. [20]

Imports and exports[edit]

A proportional representation of Nepal's exports.

Nepal's merchandise trade balance has improved somewhat since 2000 with the growth
of the carpet and garment industries. In the fiscal year 2000–2001, exports posted a
greater increase (14%) than imports (4.5%), helping bring the trade deficit down by 4%
from the previous year to $749 million. Recently, the European Union has become the
largest buyer of ready-made garments; fruits and vegetables (mostly apples, pears,
tomatoes, various salads, peach, nectarine, potatoes, rice) from Nepal. Exports to the
EU accounted for 46.13 percent of the country's garment exports. [21]
The annual monsoon rain strongly influences economic growth. From 1996 to 1999, real
GDP growth averaged less than 4%. The growth rate recovered in 1999, rising to 6%
before slipping slightly in 2001 to 5.5%.
Strong export performance, including earnings from tourism, and external aid have
helped improve the overall balance of payments and increase international reserves.
Nepal receives substantial amounts of external assistance from the United Kingdom,[22][23]
[24]
 the United States, Japan, Germany, and the Nordic countries.
Several multilateral organisations such as the World Bank, the Asian Development
Bank, and the UN Development Programme also provide assistance. In June 1998,
Nepal submitted its memorandum on a foreign trade regime to the World Trade
Organization and in May 2000 began direct negotiations on its accession.

Resources[edit]
Tourists trekking in Annapurna region in western Nepal. Tourism plays a vital role in Nepal's economy.

Progress has been made in exploiting Nepal's natural

resources, tourism and hydroelectricity. With eight of the world's 10 highest mountain
peaks, including Mount Everest at 8,848.86 m. In the early 1990s, one large public
sector project and a number of private projects were planned; some have been
completed. The most significant private sector financed hydroelectric projects currently
in operation are the Khimti Khola (60 MW) and the Bhote Koshi Project (36 MW). The
project is still undergoing and has dependency on China, India and Japan to take the
further steps.
Upper Tamakoshi hydropower, biggest hydropower in Nepal.

Nepal has 83,000 MW of theoretical and 42,133 MW of technically/financially viable

hydroelectric potential, however the total installed capacity, at present, is mere 1095
MW.[25]
The environmental impact of Nepal's hydroelectric Own calendar (Bikram Sambat) New
year in mid- April projects has been limited by the fact that most are "run-of-the-river"
with only one storage project undertaken to date. The largest hydroelectric plant under
consideration is the West Seti Dam (750 MW) storage project dedicated to exports to be
built by the private sector. Negotiations with India for a power purchase agreement have
been underway for several years, but agreement on pricing and financing remains a
problem. Currently demand for electricity is increasing at 8-10% a year whereas Nepal's
option to have agreement with India will make this fulfilment against demand. As of
June 2022 surplus electricity up to 364 MWp by Nepal is exported to India. [26]
Population pressure on natural resources is increasing. Over-population is already
straining the "carrying capacity" of the middle hill areas, particularly the Kathmandu
Valley, resulting in the depletion of forest cover for crops, fuel, and fodder and
contributing to erosion and flooding. Although steep mountain terrain makes exploitation
difficult, mineral surveys have found small deposits
of limestone, magnesite, zinc, copper, iron, mica, lead, and cobalt. Coal mining is also
done with 11522 tones produced in 2018 alone.
The development of hydroelectric power projects also cause some tension with local
indigenous groups, recently[when?] empowered by Nepal's ratification of ILO Convention
169.[27]

Macro-economic trend[edit]
This is a chart of trend of gross domestic product of Nepal at market prices estimated by
the International Monetary Fund and EconStats with figures in millions of Nepali
Rupees.[citation needed]

Year Gross domestic product

1960 3,870

1965 5,602

1970 8,768

1975 16,571

1980 23,350

1985 46,586

1990 103,415

1995 219,174

2000 379,488

The following table shows the main economic indicators in 1980–2018. [28]

1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Ye 19 9 19 9 0 0 0 0 0 20 0 0 0 0 0 0 0 0 20 20 0 20 20
ar 80 8 90 9 0 0 0 0 0 09 1 1 1 1 1 1 1 1 18 19 2 21 22
5 5 0 5 6 7 8 0 1 2 3 4 5 6 7 0

2 2 3 4 4 4 5 5 5 6 6 7 7 7
G 9. 1
14 0. 8. 8. 0. 3. 7. 49 2. 5. 9. 2. 7. 0. 1. 8. 84 10 13 14
DP 6. 8 1
.3 9 7 4 9 4 0 .5 5 5 2 6 6 6 8 5 .3 3. 2. 2.
in 02 6 9.
9 0 5 5 7 9 5 6 8 0 3 7 2 2 2 9 7 28 13 81
$ Bl B 9
Bl B B B B B B Bl B B B B B B B B Bl Bl Bl Bl
(PP n. ln B
n. ln ln ln ln ln ln n. ln ln ln ln ln ln ln ln n. n n n
P) . ln
. . . . . . . . . . . . . .

G 40 5 76 9 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 3, 3, 4, 4,
DP 9 7 2 5 5 6 7 85 9 0 1 2 3 4 4 6 84 25 7 18 76
 per
ca
pit
a 1 0 7 5 7 4 3 4 3 8 6 7 7 7
4 0 7 7 3 2 6 9 7
in 1 0 9 9 7 6 1 2 9 7 4 7 9 1
$ (
PP
P)

G
DP
gro −2 6. 14 3. 6. 3. 3. 3. 6. 4. 4. 3. 4. 4. 6. 3. 0. 8. 6.
wt .3  1  .4  5  1  5  4  4  1  5  8  4  8  1  0  3  6  2  7 
h % % % % % % % % % % % % % % % % % % %
(rea
l)

Inf
lati
on 9. 4. 8. 7. 3. 4. 8. 6. 6. 12 9. 9. 8. 9. 9. 7. 9. 4. 4.
(in 8  1  9  7  4  5  0  2  7  .6  6  6  3  9  0  2  9  5  2 
Per % % % % % % % % % % % % % % % % % % %
cen
t)

Go
v.
de
bt 5 5 4 4 4 3 3 3 3 2 2 2 2 27
39 
(Pc ... ... ... ... 8  1  9  3  2  4  2  4  2  8  5  7  7  .4 
%
t. % % % % % % % % % % % % % %
of
GD
P)

Statistics[edit]
GDP: purchasing power parity - $84.37 Billion (2018 est.) [29][dubious – discuss]
GDP - real growth rate: 21.77% (2017)
GDP - per capita: purchasing power parity (current international $) - $2700 (2017
est.) GDP - composition by sector:
agriculture: 17%
industry: 13.5%
services: 60.5% (2017 est.)
tourism: 9%
Population below poverty line: 25.6% (2017/2018)[30]
Household income or consumption by percentage share:
lowest 10%: 3.2%
highest 10%: 29.8% (1995–96)
Inflation rate (consumer prices): 4.5% (2017)
Labour force: 4 million (2016 est.)[citation needed]
Labor force - by occupation: agriculture 19%, services 69%, industry 12% (2014 est.)
Unemployment rate: 1.47% (2017 est.)
Budget:
revenues: $5.954 billion
expenditures: $5.974 billion, including capital expenditures of $NA (2017 est.)
Industries: tourism, carpet, textile; small rice, jute, sugar,
and oilseed mills; cigarette; cement and brick production
Industrial production growth rate: 10.9% (2017 est.):
Electricity - production: 41,083 GWh (2017)
Electricity - production by source:
fossil fuel: 7.5%
hydro: 91.5%
nuclear: 0.3%
other: 0.7% (2001)
Available energy:6957.73 GWh (2017) NEA Hydro:2290.78 GWh (2014) NEA
Thermal:9.56 GWh (2014) purchase (total):2331.17 GWh (2014) India
(purchase):2175.04 GWh (2017) Nepal (IPP):1258.94 GWh (2014)
Electricity - consumption: 4,776.53 GWh (2017)
Electricity - exports: 856 GWh (2001) Electricity - imports: 12 GWh (2001)
Oil - production: 0 barrels per day (0 m3/d) (2001 est.)
Oil - consumption: 1,600 barrels per day (250 m3/d) 2001
Agriculture - products: Fruits and vegetables,
mostly: apples, pears, tomatoes, peaches, nectarines, potatoes, rice, maize, wheat, sug
arcane, root crops, milk, and buffalo meat.
Exports: $1.29 billion f.o.b., but does not include unrecorded border trade
with India (2020 est.)
Exports - commodities: carpets, clothing, leather goods, jute goods, grain
Exports - partners: India 56.6%, US 11.5%, Turkey 9.2% (2016 est.)
Imports: $1.6 billion f.o.b. (2021 est.)
Imports - commodities: gold, machinery and equipment, petroleum products, electrical
goods, medicine
 Imports - partners: India 70.1%, China 10.3%, UAE 2.6%, Singapore 2.1%, Saudi
Arabia 1.2%. (2016 est.)
Debt - external: $8.8 billion (2021 est.)
Economic aid - recipient: $2 billion (FY 2019/20)
Currency: 1 Nepali rupee (NPR) = 100 paisa
Fiscal year: 16 July - 15 July

See also[edit]

 Nepal portal

 Special Economic Zones (Nepal)

 Mineral resources of Nepal