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. Textile and carpet production, accounteing for about 80% of foreign exchange earnings in recent years, contracted significantly in 2001 due to the overall slowdown in the world economy and pressures by Maoist insurgents on factory owners and workers. Security concerns in the wake of Maoist activity, the June massacre of many members of the royal family, and the September 11 terrorist attacks in the US led to a decrease in tourism, another key source of foreign exchange. 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 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 - $35.6 billion (2001 est.)

GDP - real growth rate 2.6% (2001 est.)

GDP - per capita purchasing power parity - $1,400 (2001 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)

Distribution of family income - Gini index 36.7 (1995-96)

Inflation rate (consumer prices) 2.1% (FY00/01 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 47% (2001 est.)

Budget
revenues: $665 million
expenditures: $1.1 billion, including capital expenditures of $NA (FY99/00 est.)

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

Industrial production growth rate 8.7% (FY99/00)

Electricity - production 1.454 billion kWh (2000)

Electricity - production by source
fossil fuel: 9.56%
hydro: 90.44%
other: 0% (2000)
nuclear: 0%

Electricity - consumption 1.431 billion kWh (2000)

Electricity - exports 95 million kWh (2000)

Electricity - imports 174 million kWh (2000)

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

Exports $757 million (f.o.b., FY00/01 est.), but does not include unrecorded border trade with India

Exports - commodities carpets, clothing, leather goods, jute goods, grain

Exports - partners India 48%, US 26%, Germany 11% (FY00/01)

Imports $1.6 billion (f.o.b., FY00/01 est.)

Imports - commodities gold, machinery and equipment, petroleum products, fertilizer

Imports - partners India 39%, Singapore 10%, China/Hong Kong 9%, (FY00/01)

Debt - external $2.55 billion (FY00/01)

Economic aid - recipient $424 million (FY00/01)

Currency Nepalese rupee (NPR)

Currency code NPR

Exchange rates Nepalese rupees per US dollar - 76.675 (January 2002), 74.961 (2001), 71.094 (2000), 68.239 (1999), 65.976 (1998), 58.010 (1997)

Fiscal year 16 July - 15 July

NOTE: The information regarding Nepal on this page is re-published from the 2002 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Nepal Economy 2002 information contained here. All suggestions for corrections of any errors about Nepal Economy 2002 should be addressed to the CIA.