Nepal makes progress on poverty reduction
Nepal has achieved remarkable success in poverty reduction, nearly eradicating extreme poverty, largely driven by remittances. To strengthen future growth, Nepal should prioritize policy actions that unlock domestic opportunities, according to the World Bank’s Nepal Country Economic Memorandum: Unlocking Nepal’s Growth Potential, released on March 25, 2024.
Despite progress, Nepal’s economic growth lags regional peers. Nepal’s economy grew at an average annual real rate of just 4.2 percent between 1996 and 2023, ranking sixth out of eight South Asian nations. Structural challenges such as low productivity, declining exports, and a stagnant industrial sector have held back the economy and led to slow job creation in non-agriculture sectors. Young workers are migrating abroad in search of better job opportunities as domestic prospects remain limited.
“Nepal’s success in poverty reduction is impressive, but its economic potential remains largely untapped,” said David Sislen, World Bank Division Country Director for Maldives, Nepal, and Sri Lanka. “Nepal has significant potential to drive stronger growth and create jobs by implementing key reforms to increase the returns from migration, boost exports, use hydropower efficiently, and boost digitalization.”
“The 16th Plan for Nepal outlines a vision of good governance, social justice, and prosperity and prioritizes productivity and competitiveness, decent and productive jobs, social security, and ensuring a smooth transition from LDC status. The government is committed to ensuring an enabling policy environment for Nepal’s sustainable growth,” said Honorable Vice Chairman of the National Planning Commission, Professor Dr. Shiva Raj Adhikari.
The Nepal Country Economic Memorandum produced every five years, offers a roadmap for faster growth in key sectors. It recommends policy actions in four critical areas to unlock Nepal’s economic potential.
