Nepal’s economy gains in remittances and power, falls short on jobs and investment
Summary
Nepal’s economy has gained from stronger remittances, rising electricity generation and solid foreign exchange reserves over 11 years since the Constitution, but job creation, domestic production and private investment remain weak. Recent floods and political unrest have added fresh pressure on growth and reconstruction needs.
Key Points
- Remittance inflows, foreign exchange reserves and hydropower generation have strengthened over the past 11 years.
- The economy has struggled to create enough jobs, boost domestic production and attract private investment.
- Recent shocks including the 2015 earthquake, the blockade, COVID-19, unrest and floods have repeatedly disrupted growth.
- The World Bank expects subdued growth in FY2025/26 before a gradual recovery supported by reconstruction and hydropower expansion.
