Poor Nepal relies on aid and referrals (money
that foreign-working residents send home to their
families) to bring the country's economy together. The
own income from mainly trade, tourism and agriculture is
not enough to support the population.
The vast majority of Nepalese feed on small-scale
agriculture, but the importance of the industry to the
country's economy has declined over the past quarter
century. The same trend is found in industry. Instead,
trade and tourism have become increasingly important.
Exports of hydropower have great potential to become an
important future source of income.
Major imports by Nepal, covering a full list of top products imported by the country and trade value for each product category.
Nepal is one of the countries in the world with the
highest percentage of referrals in relation to GDP.
About a quarter of Nepal's GDP is estimated to consist
of referrals. In 2015, the value of remittances was ten
times greater than foreign aid and 2.5 times greater
than the value of Nepal's total exports.
Every year, millions of Nepalese leave home for work
in, for example, the construction industry or households
in India, Malaysia or the countries of the Persian Gulf.
According to a statement from Amnesty International
2017, one fifth of Nepal's population worked abroad,
that is, just over five million people. Many of them are
young; around 70 percent of the population is under 35
and unemployment is around 40 percent (see Labor
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including NPL which represents the country of Nepal.
The tourism industry is growing
The tourism industry expanded rapidly during most of
the 1990s, but was subsequently severely affected by the
civil war of 1996-2006 (see Modern History). After the
end of the war, the tourism industry was given a new
boost, to temporarily suffer a decline when the
earthquake in April 2015 destroyed a large part of the
infrastructure and many of the attractions in the
Kathmandu Valley. The tourism industry has since
The state budget runs with a constant deficit, which
is covered by loans and assistance. Important donor
countries are India, the United Kingdom, China and
Japan, while the World Bank and the Asian Development
Bank are the largest lenders.
Attempts have been made to accelerate the economy
through more efficient tax cuts, the sale of state-owned
enterprises, the dismantling of trade barriers and
improved conditions for the industry. But political
unrest with many shifts in government has led to an
inconsistent economic policy. Populist election promises
on local development projects have burdened the state
budget, corruption is widespread and the reporting of
money spent has serious flaws. The civil war meant
severe disruptions to the economy, and after the peace
agreement, strikes and blockades continued to hinder,
among other things, trade exchanges across the border
The spring 2015 earthquake also hit hard on the
economy and it will take many years for the country to
fully recover. The value of the damage caused by the
disaster was estimated at about $ 1.9 billion. The total
cost of Nepal was one third of GDP in 2015. The
government set up a fund for rebuilding and contributed
$ 200 million to it. Foreign governments and
international donors contributed $ 1.8 billion.
Although growth is relatively good, it is not enough
to create real economic development. The business cycle
mainly fluctuates in line with how good the harvests
are, and depends less on the economic development in the
world. Nine out of ten Nepalese work in the informal
sector of the economy, which means that the supply is
uncertain and the state loses large tax revenues.
Nepal has long been hit by high inflation due to
declining production in agriculture and industry, as
well as rising food prices in the international market
and political turmoil in the country.
FACTS - FINANCE
GDP per person
US $ 1,026 (2018)
US $ 28,812 million (2018)
6.3 percent (2018)
Agriculture's share of GDP
25.0 percent (2018)
Manufacturing industry's share of GDP
4.9 percent (2018)
The service sector's share of GDP
50.3 percent (2018)
4.5 percent (2019)
Government debt's share of GDP
30.2 percent (2018)
US $ 4,963 M (2017)
US $ 840 million (2017)
US $ 10,000 million (2017)
- US $ 815 million (2017)
Commodity trade's share of GDP
50 percent (2018)
Main export goods
carpets, clothing, iron and steel products, jute
Largest trading partner
India, USA, China, Bangladesh, Germany
A transitional government is formed
In accordance with the peace agreement between the government and the Maoist
guerrilla CPN-M, a transitional government is formed, with the participation of
CPN-M. It will govern the country until an ordinary government can be appointed
through general elections.
The UN is monitoring the peace agreement
The UN Mission (United Nations Mission in Nepal) is deployed in the country
to help monitor the election of a Constituent Assembly (see June 2006)
and to ensure that the peace agreement is followed by both parties.