Economy of Nepal

Nepal has a developing mixed economy that relies on several key areas such as agriculture, services, industry, and tourism. For many people in Nepal, farming is the main way to make a living, but services like trade, transport, and communications are becoming more important.

In recent years, Nepal has started to focus more on areas like hydropower, making things in factories, and technology. The government is working hard to bring in more money from other countries and to make travel and roads better. Nepal’s goals include growing in a way that lasts and connecting more with nearby countries for trade and other opportunities.

History

In 1956, Nepal began using a plan called the Five-Year Plans to help the country grow. The government took control of many important jobs and businesses, like making things and selling food. They also set rules for trading and kept prices low for things people needed.

But things didn’t improve as hoped. Growth was slow, and the country faced money problems. In the mid-1980s, Nepal started new plans with help from groups like the International Monetary Fund and the World Bank. These plans made it easier to trade and do business, and they changed how money was used in the country.

Sectors

Main articles: Agriculture in Nepal, Animal husbandry in Nepal, and Deforestation in Nepal

Main article: Mineral resources of Nepal

Main article: Energy in Nepal

Foreign investments and taxation

Many people living outside Nepal, called Non Resident Nepalis, are putting money into different parts of Nepal's economy. Nepal has great potential for producing electricity from water, so many foreign companies want to invest there. However, changes in government leadership have slowed down these investments. Nepal has made agreements with 10 countries to prevent taxes from being paid twice. It also has special agreements to protect investments with 5 countries. In 2014, Nepal set new rules for foreign help, requiring a minimum amount for grants and loans from other countries.

Imports and exports

Nepal's trade has gotten better since 2000, especially with more carpets and clothes being made and sold. In 2000–2001, the amount of things Nepal sold to other countries grew more than the things it bought, which helped lower a big money problem by a little bit.

The weather, especially the rainy season, has a big effect on Nepal's economy. From 1996 to 1999, the economy grew slowly. It picked up in 1999 but slowed down a bit in 2001.

Doing well in selling things, getting money from tourists, and help from other countries have made Nepal's money situation better and increased its savings from other countries. Nepal gets a lot of help from places like the United Kingdom, the United States, Japan, Germany, and the Nordic countries.

Big groups like the World Bank, the Asian Development Bank, and the UN Development Programme also give help. In 1998, Nepal shared its plans for trade rules with the World Trade Organization and started talking about joining them in 2000.

Labour

Main article: Labour in Nepal

Nepal's economy relies on many people working in different jobs. Most people find work in farming, which feeds the country and many others. As Nepal grows, more jobs are appearing in services like trading goods, moving things around, and talking to people from far away. This helps the country stay busy and strong.

Resources

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

Nepal has made progress in using its natural resources, including tourism and hydroelectricity. The country is home to eight of the world's ten highest mountains, such as Mount Everest, which stands at 8,848.86 meters tall. Several hydroelectric projects have been started, with some now operating, like the Khimti Khola and the Bhote Koshi Project.

Nepal has a lot of potential for hydroelectric power but currently uses only a small part of it. The environment around these projects is generally safe because most of them do not store water. There are plans for bigger projects, but talks with other countries about how to share the power are still ongoing. Meanwhile, Nepal sometimes sells extra electricity to nearby countries. The country also has small amounts of different minerals, and some coal mining takes place as well.

Macro-economic trend

This is a chart showing how Nepal's economy has grown over time, with numbers in millions of Nepali Rupees.

The following table shows important numbers about Nepal's economy from 1980 to 2024. When inflation is below 5%, it is shown in green.

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

Year	GDP (in billion US$ PPP)	GDP per capita (in US$ PPP)	GDP (in billion US$ nominal)	GDP growth (real)	Inflation (in Percent)	Government debt (in % of GDP)
1980	7.68	491	2.26	−2.3%	9.8%	n/a
1985	12.59	718	3.21	6.1%	4.1%	n/a
1990	18.37	936	4.44	4.6%	8.9%	n/a
1995	26.70	1197	5.38	3.5%	7.7%	n/a
2000	36.70	1494	6.54	6.1%	3.4%	50.8%
2005	49.01	1865	9.33	3.5%	4.5%	45.1%
2006	52.23	1969	10.32	3.4%	8.0%	42.9%
2007	55.47	2076	11.78	3.4%	6.2%	37.9%
2008	59.99	2232	14.31	6.1%	6.7%	36.8%
2009	63.10	2335	14.66	4.5%	12.6%	39.5%
2010	66.94	2465	18.25	4.8%	9.6%	35.4%
2011	70.66	2591	21.69	3.4%	9.6%	32.4%
2012	75.34	2756	21.70	4.7%	8.3%	34.5%
2013	79.32	2897	22.16	3.5%	9.9%	31.9%
2014	85.55	3115	22.72	6.0%	9.0%	27.6%
2015	89.78	3252	24.36	4.0%	7.2%	25.7%
2016	91.02	3267	24.52	0.4%	9.9%	25.0%
2017	100.97	3583	28.97	9.0%	4.5%	25.0%
2018	111.09	3897	33.11	7.6%	4.1%	31.1%
2019	121.06	4199	34.19	6.7%	4.6%	34.0%
2020	122.69	4180	33.43	−2.4%	6.2%	43.3%
2021	134.00	4461	36.93	4.8%	3.6%	43.3%
2022	151.64	4964	41.18	5.6%	6.3%	42.7%
2023	160.16	5153	40.91	2.0%	7.8%	47.1%
2024	169.12	5348	43.67	3.1%	5.6%	49.7%

Statistics

Nepal's economy is growing, with a big part of its strength coming from farming, services, and tourism. In 2024, its total economy was worth about $149.643 billion when looking at the value people can buy with their money.

Most people in Nepal work in farming or services. Farming takes up about 17% of the economy, services like trade and transport are about 60.5%, and industry adds another 13.5%. Tourism is also important, making up around 9% of the economy. However, many people still live below the poverty line, with about 20.3% of the population affected as of 2022.

The country exports things like carpets, clothing, and leather goods, mostly to India, the United States, and Turkey. Imports include gold, machinery, and petroleum products, mainly from India, China, and the United Arab Emirates. Nepal also gets help from other countries, receiving about $2 billion in economic aid in the years 2019 to 2020. The country's money is called the Nepali rupee.