According to the UN classification, Nepal is one of the least economically developed countries in the world; almost half of its population lives below the poverty line. The low level of development is determined by the isolation of the country, the diversified economy, feudal remnants, lack of financial resources and natural conditions.
In 2003, Nepal’s GDP was $ 5.85 billion, or $ 242 per capita. Annual GDP growth rates are not high: in 1990-1999 they were less than 5%, in 1999/2000 – 6.5%. Under the influence of the slowdown in the growth of the world economy, the rate of economic growth in 2000 fell to 3.7%. Real GDP growth in 2001/2002 was only 0.8%, reaching the lowest level in the last 20 years. Although the situation was stabilized next year, real GDP growth does not exceed 2.4%.
Nepal is predominantly an agricultural country. Agriculture plays an important role in the economy, as well as foreign trade and tourism. The share of agriculture in GDP is 40%, industry – 22%, services (tourism, trade, transport, etc.) – 37% (2002).
The country’s economic development since 1955 has been carried out on the basis of state plans. During this period, 9 state plans were adopted. The Tenth Plan (2002-2007) is currently being implemented. The first four plans focused on infrastructure development, especially transport and energy. However, many of the tasks set then were not realized. Subsequently, the emphasis of state plans shifted to the development of agriculture and industry, as well as the fight against poverty. Until the mid-1970s, the focus was on the development of the public sector of the economy. In the late 1970s and early 1980s, state industrial production began to decline sharply, and private entrepreneurship and foreign investment were encouraged. Beginning in May 1991, the government embarked on a course of economic liberalization by encouraging foreign investment. The government cut government spending by cutting subsidies, reducing the number of civil servants, privatizing industrial enterprises and freezing unpromising development projects. The most promising industries are manufacturing, tourism, energy, services, forestry and agriculture.
The economically active population is more than 10 million people (1996). Agriculture employs 81% of the workforce, services 16%, and industry 3%. Unemployment rate 47% (2001).