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Nepal Economy

    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. Apart from agricultural land and forests, exploitable natural resources are mica, hydropower, and tourism. Agricultural production is growing by about 5% on average as compared with annual population growth of 2.5%. Since May 1991, the government has been moving forward with economic reforms particularly those that encourage trade and foreign investment, e.g., by eliminating 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—$26.2 billion (1998 est.)

    GDP—real growth rate: 4.9% (1998 est.)

    GDP—per capita: purchasing power parity—$1,100 (1998 est.)

    GDP—composition by sector:
    agriculture: 41%
    industry: 22%
    services: 37% (1997)

    Population below poverty line: 42% (1995-96 est.)

    Household income or consumption by percentage share:
    lowest 10%: 3.2%
    highest 10%: 29.8% (1995-96)

    Inflation rate (consumer prices): 7.8% (1998 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 (1996)

    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: 14.7% (FY94/95 est.)

    Electricity—production: 1.032 billion kWh (1996)

    Electricity—production by source:
    fossil fuel: 3.1%
    hydro: 96.9%
    nuclear: 0%
    other: 0% (1996)

    Electricity—consumption: 1.013 billion kWh (1996)

    Electricity—exports: 89 million kWh (1996)

    Electricity—imports: 70 million kWh (1996)

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

    Exports: $394 million (f.o.b., 1997), but does not include unrecorded border trade with India

    Exports—commodities: carpets, clothing, leather goods, jute goods, grain

    Exports—partners: India, US, Germany, UK

    Imports: $1.7 billion (c.i.f., 1997)

    Imports—commodities: petroleum products 20%, fertilizer 11%, machinery 10%

    Imports—partners: India, Singapore, Japan, Germany

    Debt—external: $2.4 billion (1997)

    Economic aid—recipient: $411 million (FY97/98)

    Currency: 1 Nepalese rupee (NR) = 100 paisa

    Exchange rates: Nepalese rupees (NRs) per US$1—67.675 (January 1999), 65.976 (1998), 58.010 (1997), 56.692 (1996), 51.890 (1995), 49.398 (1994)

    Fiscal year: 16 July—15 July

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Revised 1-Mar-99
Copyright © 1999 Photius Coutsoukis (all rights reserved)