About Nepal

Nepal, the beautiful Himalayan country with rich natural resources and diverse ecological zones, remains one of the poorest countries in the world due to the failure to utilize its potential. According to the Nepal Living Standards Survey (NLSS)-IV released in 2024, a total of 20.27 percent of Nepalis are living below the poverty line. The poverty level declined by just 4.93 percentage points over the last 12 years. Due to a lack of employment opportunities, an estimated 3.5 million Nepalese youths (14% of the total population) work abroad, mostly as unskilled laborers in Gulf countries. The data does not include seasonal migrant workers working in India, as Nepal and India share an open border allowing unhindered access to both parties. Likewise, the trend of youths leaving the country for education and training and settling abroad has been increasing in recent years.

Nepal is grappling with a significant trade imbalance, with exports totaling NPR 157.140 billion (approx. USD 1.2 billion) in 2022/23, while imports reached NPR 1.611 trillion (approx. USD 12 billion) in the same fiscal year. In response to this imbalance and dwindling foreign currency reserves, the government implemented stringent measures, including a ban on luxury goods in April 2022. Although there has been an uptick in foreign currency reserves recently, Nepal's economy remains vulnerable unless efforts are made to improve its competitive edge and diversify its export markets.

Nepal’s competitiveness in the international market could become more challenging with its graduation to a middle-income country from LDC status in 2026, as this will reduce certain privileges Nepalese products have been receiving in international markets. While the government and private sector have initiated efforts to promote exports, more concerted actions are needed to unleash the sector's potential and address the challenges associated with Nepal's impending graduation to middle-income country status.

Ready-made garments (RMGs) have emerged as a cornerstone of Nepal's exports, constituting around 20 percent of total exports. Shipments of RMGs surged by 16.1 percent to NPR 4.97 billion (approx. USD 37.3 million) in the first half of the Nepali fiscal year 2080/81 (2023/24). The Garment Association of Nepal, the umbrella organization of garment entrepreneurs, reports a significant increase in RMG exports from NPR 5,319 million (approx. USD 40 million) in 2020/21 to NPR 7,299 million (approx. USD 54.8 million) in 2021/22. Despite challenges in cost competitiveness, Nepal has been able to boost RMG exports largely due to preferential trade arrangements such as Nepal's Least Developed Country (LDC) status, Multifiber Arrangement quotas, and the Nepal Trade Preference Program (NTPP) of the United States of America (USA). However, there are concerns that Nepal may lose these preferential treatments upon its graduation to a middle-income country from LDC status in 2026, which may have severe implications for Nepal’s economy and the people associated with it.