Nepal Economy Facts
Economical overview
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.
- Countryaah.com: 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 market).
- 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. Check findjobdescriptions to learn more about 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 recovered.
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 with India.
Devastating earthquake
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)
Total GDP
US $ 28,812 million (2018)
GDP growth
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)
Inflation
4.5 percent (2019)
Government debt’s share of GDP
30.2 percent (2018)
External debt
US $ 4,963 M (2017)
Currency
Nepalese rupee
Merchandise exports
US $ 840 million (2017)
Imports
US $ 10,000 million (2017)
Current account
– US $ 815 million (2017)
Commodity trade’s share of GDP
50 percent (2018)
Main export goods
carpets, clothing, iron and steel products, jute products
Largest trading partner
India, USA, China, Bangladesh, Germany
2007
April
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.
January
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.
