In a very broad sense, the economy generally refers to something pecuniary and lucrative. When we refer to the economy of a country, it means the system of trade and industry by which wealth is made and used, and it encompasses the total resources of a country. The economy is affected by various processes and factors like culture, law, history, geography etc of the country. These factors govern the functioning of the economy. The economy coexists with human practices and transactions. The economy of Nepal is not satisfactory. Let’s start with what the economy includes and how we can describe the economy of Nepal.
The economy can be of different types. It may be a market-based economy, command-based economy or green economy. The economy of a country can be measured in various ways. However, Gross Domestic Product (GDP) is the favoured method for its measurement. GDP provides the best general overview of the country’s economy. It is one of the primary indicators that represent the monetary value of goods produced in a country over a specific time period. The expression of GDP is usually in comparison to the previous year.
Economy of Nepal and Nepal economy overview
Talking about the status quo of Nepal’s economy, it indeed is not in good nick. Sandwiched between two domineering neighbouring countries, India and China, Nepal is a country which is still in an early developing phase. Nepal is a poor country, and among the South Asian countries, it is the poorest. Nepal centres on the agrarian economy, and there are many reasons for Nepal’s economy not to take a fast pace in development.
The main reason is political instability and corruption. The political system of the country has changed from a monarchy to being ruled by the Communist party presently. The changes in the political scenario with rampant corruption are significant problems for the economy of Nepal to be lagging. Also, Nepal lacks entrepreneurial dynamism. There is a lack of transparency.
Nepal GDP per capita is not satisfactory
The statistics of Nepal‘s economy is not satisfactory. According to the data of 2014 estimation, GDP is $67 billion, and the GDP per capita is $2400. GDP’s composition according to the sector shows that agriculture includes 37%, industry entails 17%, and service includes 50%. GDP- real growth rate is 2.5% (2016). According to data from 2011, 23.8% of the total population is below the poverty line. The situation is appalling, as nearly a quarter of the total population of Nepal is impoverished. The household composition or income ranges from 3.2% in the lowest 10% to 29.8% in the highest 10%. 2012 estimations show the unemployment rate to be 38%.
Each year, youths join the rank of job seekers. Many strive to go abroad as unskilled labour or languish as a part of the unproductive workforce. The remittances form a significant part of the country’s economy. This unemployment rate creates a sense of vulnerability, hopelessness and helplessness among the youth. Among the 4 million labour force, 81% are indulged in agriculture, 16% in service and 3% in industry.
Nepal economy overview along with Nepal Import and Nepal Export
In a country with an agrarian economy, the other economic activities are manufacturing, trade and tourism. About 81% of people are engaged in farming. The agricultural products produced in the country are rice, maize, wheat, sugarcane, root crops, etc. Of the total area in the country, only about 20% can be cultivated. Forests, shrubs and pasturelands cover 40%. The lowland Terai produces a surplus in agriculture, part of which is supplied in the hilly region of the country.
Manufacturing is in an early developmental stage and has a small part in the country’s GDP. Nepal exports commodities like carpets, clothing, leather goods, jute goods, etc., to its export partners, of which the main ones are India, the US and Germany. The exports figure around $568 million (2002 est).
Nepal imports a huge amount of commodities like gold, machinery and equipment, petroleum products, and fertilisers and the imports figure around $1.419 billion (2002 est). Tourism and remittances have been significant to Nepal’s economy. Nepal has 42,133 MW of technically viable hydroelectricity potential, but only a scintilla of it is installed at present, i.e. 730.47 MW.
Why is it difficult to raise economy of Nepal?
Nepal economy after the earthquake
The earthquake of April 2015 created a huge loss in Nepal, and it affected the country’s economy as well. However, though at a slow pace, the country is heading back to the avenue of development. Considering the main hurdles to economic development, different plans must be made to nullify them. Nepal receives a huge amount of foreign aid for development projects. This should be used wisely for the long-term economic development of the nation.