Economy of Nepal

Nepal's gross domestic product (GDP) for 2008 was estimated at over $12 billion (adjusted to Nominal GDP), making it the 115th-largest economy in the world. Agriculture accounts for about 40% of Nepal's GDP, services comprise 41% and industry 22%. Agriculture employs 76% of the workforce, services 18% and manufacturing/craft-based industry 6%. Agricultural produce — mostly grown in the Terai region bordering India — includes tea, rice, corn, wheat, sugarcane, root crops, milk, and water buffalo meat. Industry mainly involves the processing of agricultural produce, including jute, sugarcane, tobacco, and grain.

Its workforce of about 10 million suffers from a severe shortage of skilled labour. About half of the population live below the international poverty line of $1.25 a day. The spectacular landscape and diverse, exotic cultures of Nepal represent considerable potential for tourism, but growth in this hospitality industry has been stifled by recent political events. The rate of unemployment and underemployment approaches half of the working-age population. Thus many Nepali citizens move to India in search of work; the Gulf countries and Malaysia being new sources of work. Nepal receives $50 million a year through the Gurkha soldiers who serve in the Indian and British armies and are highly esteemed for their skill and bravery. The total remittance value is worth around $1 billion, including money sent from the Persian Gulf and Malaysia, who combined employ around 700,000 Nepali citizens.

A long-standing economic agreement underpins a close relationship with India. The country receives foreign aid from India, Japan, the UK, the US, the EU, China, Switzerland, and Scandinavian countries. Poverty is acute; per-capita income is around $1,000. The distribution of wealth among the Nepalis is consistent with that in many developed and developing countries: the highest 10% of households control 39.1% of the national wealth and the lowest 10% control only 2.6%.