Economy ———-
Economic overview: Nepal is among the poorest and least developed countries in the world. Agriculture is the mainstay of the economy, providing a livelihood for over 80% of the population and accounting for about one-half of GDP. Industrial activity is limited, mainly involving the processing of agricultural produce (jute, sugarcane, tobacco, and grain). Production of textiles and carpets has expanded recently and accounted for 85% of foreign exchange earnings in FY93/94. Apart from agricultural land and forests, exploitable natural resources are mica, hydropower, and tourism. Agricultural production in the late 1980s grew by about 5%, as compared with annual population growth of 2.6%. More than 40% of the population is undernourished. 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 public expenditures by reducing subsidies, privatizing state industries, and laying off civil servants. (In 1995 little progress was made in these areas because the communist government had trouble formulating and implementing policies.) The new coalition government is planning to pick up the pace of reforms in 1996, focusing primarily on raising revenues to develop the rural sector by increasing taxation and privatization. Prospects for foreign trade and investment, particularly in areas other than power development and tourism, will continue to remain poor because of the small size of the economy, its technological backwardness, its remoteness, and its susceptibility to natural disaster. The international community provides funding for 62% of Nepal's developmental budget and for 34% of total budgetary expenditures.
GDP: purchasing power parity - $25.2 billion (1995 est.)
GDP real growth rate: 2.3% (1995 est.)
GDP per capita: $1,200 (1995 est.)
GDP composition by sector: agriculture: 49.3% industry: 18.4% services: 32.3% (1993)
Inflation rate (consumer prices): 6.7% (FY94/95)
Labor force: 8.5 million (1991 est.) by occupation: agriculture 93%, services 5%, industry 2% note: severe lack of skilled labor
Unemployment rate: NA%; substantial underemployment (1995)
Budget:
revenues: $645 million
expenditures: $1.05 billion, including capital expenditures of $NA
(FY94/95 est.)