During the late 18th-early 19th centuries, the principality of Gorkha united many of the other principalities and states of the sub-Himalayan region into a Nepalese Kingdom. Nepal retained its independence following the Anglo-Nepalese War of 1814-16 and the subsequent peace treaty laid the foundations for two centuries of amicable relations between Britain and Nepal. (The Brigade of Gurkhas continues to serve in the British Army to the present day.) In 1951, the Nepali monarch ended the century-old system of rule by hereditary premiers and instituted a cabinet system that brought political parties into the government. That arrangement lasted until 1960, when political parties were again banned, but was reinstated in 1990 with the establishment of a multiparty democracy within the framework of a constitutional monarchy.
Southern Asia, between China and India
quartz, water, timber, hydropower, scenic beauty, small deposits of lignite, copper, cobalt, iron ore
Population - distribution
most of the population is divided nearly equally between a concentration in the southern-most plains of the Tarai region and the central hilly region; overall density is quite low
Nepali (official) 44.6%, Maithali 11.7%, Bhojpuri 6%, Tharu 5.8%, Tamang 5.1%, Newar 3.2%, Magar 3%, Bajjika 3%, Urdu 2.6%, Avadhi 1.9%, Limbu 1.3%, Gurung 1.2%, other 10.4%, unspecified 0.2%
KATHMANDU (capital) 1.183 million (2015)
- Conventional long form
- Federal Democratic Republic of Nepal
- Conventional short form
- Local long form
- Sanghiya Loktantrik Ganatantra Nepal
- Local short form
federal parliamentary republic
- Geographic coordinates
- 27 43 N, 85 19 E
- Time difference
- UTC+5.75 (10.75 hours ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; non-party state to the ICCt
Nepal is among the poorest and least developed countries in the world, with about one-quarter of its population living below the poverty line. Nepal is heavily dependent on remittances, which amount to as much as 30% of GDP. Agriculture is the mainstay of the economy, providing a livelihood for almost two-thirds of the population but accounting for only one-third of GDP. Industrial activity mainly involves the processing of agricultural products, including pulses, jute, sugarcane, tobacco, and grain.
- External debt stocks
- US$ 4,155,117,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ 2,446,630,400
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 8,321,894,907
- Exports of goods and services
- US$ 2,253,504,600
- Total Merchandise Trade
- FDI, net inflows
- US$ 51,895,700
- Commercial Service Exports
- US$ 1,060,298,853
pulses, rice, corn, wheat, sugarcane, jute, root crops; milk, water buffalo meat
tourism, carpets, textiles; small rice, jute, sugar, and oilseed mills; cigarettes, cement and brick production
- clothing, pulses, carpets, textiles, juice, jute goods
- India 58.6%, US 10%, Germany 4% (1 January - 30 October 2016)
- petroleum products, machinery and equipment, gold, electrical goods, medicine
- India 61.5%, China 15.4% (1 January - 30 October 2016)
- Country Risk Rating
- A high-risk political and economic situation and an often very difficult business environment can have a very significant impact on corporate payment behavior. Corporate default probability is very high.
- Business Climate Rating
- The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. The institutional framework has very serious weaknesses. Intercompany transactions can thus be very difficult to manage in the highly risky environments rated D.
- Private transfers sustaining household consumption, the main driver of growth
- Lively services sector, especially tourism
- Financial and technical support from India and China
- Considerable international solidarity
- Heavily dependent on the agricultural sector and vulnerable to weather events
- Isolated and difficult access to many of the country's regions
- Economy strongly affected by the earthquakes of April and May 2015
- Weak productivity of the secondary sector
- Infrastructure shortcomings, recurrent electricity and fuel shortages
- Recurrent political difficulties and violence
Growth slowed sharply in 2016, because of the delays in the reconstruction of the areas and infrastructure damaged by the earthquakes which struck in April and May 2015. Growth is expected to rebound in 2017 - reconstruction programs having been planned. However, the country suffers from ongoing delays in the implementation of the budget which could, once again, hamper activity. However, investment is expected to increase, while exports will still be impeded by the destruction of the means of production and deteriorating infrastructure, already inadequate before the disaster. Household consumption, the main engine of the economy, should continue to benefit from substantial expatriate remittances (29% of GDP in 2015). Its strength will however be limited by the inflationary tensions associated with high transportation costs and the slight oil price increase.
The Nepalese economy is poorly diversified and remains heavily dependent on agriculture, which employs 70% of the population and accounts for one third of GDP. Having been hit by crop destruction, harvests are expected to be more abundant in 2017, which will support the sector. Despite the expected rebound in investment, notably in construction, the industrial sector is likely to continue to be affected by shortages, especially of energy, while the hydroelectric potential is still under-exploited (about 1% exploitation in 2015). Finally, the tourism sector is expected to recover but will continue to be adversely affected by the damage caused by the earthquake.
In 2017, the budget significantly higher than in the past year, will prioritize the sectors affected by the earthquakes. The fiscal balance is therefore likely to remain in deficit for the second year in a row. However, public debt is likely to remain contained. Furthermore, the country will benefit from the financial support of the international community and donations will help limit borrowing. Nonetheless, the Nepalese government's ability to turn the economy round seems problematic, with the country suffering from a low budget implementation rate. During the 2015/2016 tax year, almost 50% of spending was carried out in the last month, which meant poorly organized and poor quality spending.
With regard to the external accounts, the country runs a significant trade deficit with a high level of imports of many products. Despite substantial remittances by expatriate workers and the rebound in tourism revenues, higher imports of capital goods needed for the reconstruction effort are likely to result in a worsening current account balance.
Political instability has prevailed since the end of the civil war in 2006. The first national elections which followed the abolition of the monarchy took place in 2008. The situation between the two main political parties is tense. The November 2013 elections enabled a return to relative political stability. The Assembly, elected in November 2013, was tasked with drafting the new constitution and the earthquakes which struck in spring 2015 and popular discontent pushed the various political leaders into making an effort at national unity. The Constituent Assembly adopted a draft constitution in September 2015. However, the negotiations over the Constitution were conducted in a climate of violence and several minority groups still object to the division of some provinces and are organizing protests in the south of the country. In 2016, the country underwent a new period of political instability, with the prime minister stepping down following a no-confidence vote in Parliament. A new coalition was formed and Pushpa Kamal Dahal (Communist Party) was appointed as prime minister. On his first visit to India, he promised to amend the Constitution. Relations between the two countries deteriorated after the Constitution was adopted and this trip helped forge closer links. Nevertheless, the new leadership team can only govern by maintaining alliances with the many parties represented in Parliament.
The country's political stability remains in the balance and another period of instability and violence cannot be ruled out with social and ethnic tensions running high. Finally, shortcomings in the business climate are expected to persist.