Nepal Economy Profile 2001

Economy - overview

Nepal is among the poorest and least developed countries in the world with nearly half of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for over 80% of the population and accounting for 41% of GDP. Industrial activity mainly involves the processing of agricultural produce including jute, sugarcane, tobacco, and grain. Production of textiles and carpets has expanded recently and accounted for about 80% of foreign exchange earnings in the past three years. Agricultural production is growing by about 5% on average as compared with annual population growth of 2.3%. Since May 1991, the government has been moving forward with economic reforms, particularly those that encourage trade and foreign investment, e.g., by reducing business licenses and registration requirements in order to simplify investment procedures. The government has also been cutting expenditures by reducing subsidies, privatizing state industries, and laying off civil servants. More recently, however, political instability - five different governments over the past few years - has hampered Kathmandu's ability to forge consensus to implement key economic reforms. Nepal has considerable scope for accelerating economic growth by exploiting its potential in hydropower and tourism, areas of recent foreign investment interest. Prospects for foreign trade or investment in other sectors will remain poor, however, because of the small size of the economy, its technological backwardness, its remoteness, its landlocked geographic location, and its susceptibility to natural disaster. The international community's role of funding more than 60% of Nepal's development budget and more than 28% of total budgetary expenditures will likely continue as a major ingredient of growth.

GDP (purchasing power parity)

purchasing power parity - $33.7 billion (2000 est.)

GDP - real growth rate

3.7% (2000 est.)

GDP - per capita (PPP)

purchasing power parity - $1,360 (2000 est.)

GDP - composition by sector

agriculture: 41%

industry: 22%

services: 37% (2000 est.)

Population below poverty line

42% (FY95/96 est.)

Household income or consumption by percentage share

lowest 10%: 3.2%

highest 10%: 29.8% (1995-96)

Inflation rate (consumer prices)

3.3% (FY99/00 est.)

Labor force

10 million (1996 est.)

note: severe lack of skilled labor

Labor force - by occupation

agriculture 81%, services 16%, industry 3%

Unemployment rate

NA%; substantial underemployment (1999)

Budget

revenues: $536 million

expenditures: $818 million, including capital expenditures of $NA (FY96/97 est.)

Industries

tourism, carpet, textile; small rice, jute, sugar, and oilseed mills; cigarette; cement and brick production

Industrial production growth rate

NA%

Electricity - production

1.255 billion kWh (1999)

Electricity - production by source

fossil fuel: 9.56%

hydro: 90.44%

nuclear: 0%

other: 0% (1999)

Electricity - consumption

1.309 billion kWh (1999)

Electricity - exports

68 million kWh (1999)

Electricity - imports

210 million kWh (1999)

Agriculture - products

rice, corn, wheat, sugarcane, root crops; milk, water buffalo meat

Exports

$485 million (f.o.b., 1998), but does not include unrecorded border trade with India

Exports - commodities

carpets, clothing, leather goods, jute goods, grain

Exports - partners

India 33%, US 26%, Germany 25% (FY97/98)

Imports

$1.2 billion (f.o.b., 1998)

Imports - commodities

gold, machinery and equipment, petroleum products, fertilizer

Imports - partners

India 31%, China/Hong Kong 16%, Singapore 14% (FY97/98)

Debt - external

$2.4 billion (1997)

Economic aid - recipient

$411 million (FY97/98)

Currency

Nepalese rupee (NPR)

Currency (code)

NPR

Exchange rates

Nepalese rupees per US dollar - 74.129 (January 2001), 71.104 (2000), 68.239 (1999), 65.976 (1998), 58.010 (1997), 56.692 (1996)

Fiscal year

16 July - 15 July