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
expenditures by reducing subsidies, privatizing state industries,
and laying off civil servants. More recently, however, political
instability--five different governments over the past few years--has
hampered Kathmandu's ability to forge consensus to implement key
economic reforms. Nepal has considerable scope for accelerating
economic growth by exploiting its potential in hydropower and
tourism, areas of recent foreign investment interest. Prospects for
foreign trade or investment in other sectors will remain poor,
however, because of the small size of the economy, its technological
backwardness, its remoteness, its landlocked geographic location,
and its susceptibility to natural disaster. The international
community's role of funding more than 60% of Nepal's development
budget and more than 28% of total budgetary expenditures will likely
continue as a major ingredient of growth.

GDP: purchasing power parity--$26.2 billion (1998 est.)

GDP--real growth rate: 4.9% (1998 est.)

GDP--per capita: purchasing power parity?$1,100 (1998 est.)

GDP--composition by sector:
agriculture: 41%
industry: 22%
services: 37% (1997)

Population below poverty line: 42% (1995-96 est.)

Household income or consumption by percentage share:
lowest 10%: 3.2%
highest 10%: 29.8% (1995-96)

Inflation rate (consumer prices): 7.8% (1998 est.)

Labor force: 10 million (1996 est.)
note: severe lack of skilled labor

Labor force--by occupation: agriculture 81%, services 16%,
industry 3%

Unemployment rate: NA%; substantial underemployment (1996)

Budget:
revenues: $536 million
expenditures: $818 million, including capital expenditures of $NA
(FY96/97 est.)

Industries: tourism, carpet, textile; small rice, jute, sugar,
and oilseed mills; cigarette; cement and brick production

Industrial production growth rate: 14.7% (FY94/95 est.)

Electricity--production: 1.032 billion kWh (1996)

Electricity--production by source:
fossil fuel: 3.1%
hydro: 96.9%
nuclear: 0%
other: 0% (1996)

Electricity--consumption: 1.013 billion kWh (1996)

Electricity--exports: 89 million kWh (1996