Nepal Economic Sectors


Nepal is an agricultural state that is largely characterized by subsistence farming. The Agriculture employs 69% of the workforce and contributes 32% to the gross domestic product.

A rapidly growing population combined with decreasing soil productivity leads to food shortages. While Nepal was still exporting food in the 1980’s, it can currently only secure the food supply for the population through constantly increasing imports. An expansion of the agricultural land is difficult due to the topographical conditions of the country.

Of the three very different agricultural zones, the Terai region is the most important with around two-thirds of all agricultural areas in Nepal. Rice, corn, wheat, millet, soy, barley, jute and legumes are grown here. The situation is far less favorable in the hilly regions, where only a third of the agricultural land is available, but almost half of the Nepalese live. The most important crops are food grain, areas unsuitable for arable farming are used for livestock farming. The agriculture in the mountainous regions is mainly based on livestock (sheep, goats, yaks) and agriculture (cultivation of potatoes, buckwheat, barley).

Agricultural production often does not bring in enough to cover the living costs of farming families. The rice harvests in particular are subject to fluctuations. The animal populations are increasing steadily, but the associated overgrazing damages the very limited land area. The high food prices, bad harvests and natural disasters exacerbate the already extremely tense situation of many families.


The restricted domestic market, the low purchasing power of the population, the strong Indian competition, the lack of the necessary infrastructure, the inadequate electricity supply and the lack of access to the sea hinder the development of the industrial sector in Nepal.

The country’s underdeveloped industry is concentrated in the Terai. Most of the companies are part of the small and house industries. They are used to process agricultural and forestry products, which provide 80% of the raw materials for the processing industry. The most important branches of industry are the food and beverage industry, the textile and carpet industry, the building materials industry, the leather processing industry and the plastics industry.

The mineral resources are believed to be in the inaccessible regions of the Himalayas. Mica, limestone, brown and hard coal are already being mined.

Energy sector

According to physicscat, Nepal has neither oil nor natural gas deposits, nor any significant deposits of other important raw materials. In the energy sector, but true account of the estimated up to 83,000 MW -potential hydropower great hopes. Today only 8% of this estimated high potential is used for electricity generation. The largest hydropower plant in the country, Kali Gandaki A (144 MW), began producing electricity in 2002. The expansion of the numerous smaller hydropower plants, which, once completed, should have a combined output of over 2,300 MW, is making slow progress. The total capacity of the power plants in Nepalis currently around 3,342 MW; the demand increases by around 50 MW annually. Only 84% of the population have electricity. As an energy source, wood covers 7% of the energy requirement.

The Nepal Electricity Authority has responded to the steadily increasing demand for electricity with a project to increase electricity production and security of supply: A tender for electricity supply contracts for operators of new solar parks has been launched. The prerequisite is that the systems have an output of more than one megawatt. The maximum output per project must not exceed five megawatts.


Tourism in the Kathmandu Valley, the Terai tropical rainforest and the Himalayas is an important source of foreign currency income. Since the peace agreement in autumn 2006, tourism has recovered surprisingly quickly: Despite the tense political situation, 2007 was a record year for the first time with more than 500,000 international tourist arrivals.

The earthquake disaster on April 25, 2015 hit the tourism sector in Nepal hard. Regardless of the security concerns, the Nepalese authorities have reopened the historic sites in the Kathmandu Valley, which were partially destroyed by the earthquake, to tourism.

The service sector benefits greatly from increasing tourism. Most of the tourists come from China and India. The Nepalese government has set itself the goal of increasing the number of tourists to two million a year by 2020.

Because of the novel coronavirus, Nepal has stopped its tourism campaign in 2020. The tourist, who in 2018 eight percent had contributed to gross domestic product (GDP) and provided for more than one million jobs is down because of the Corona pandemic halt came.

Hundreds of Nepalese trekking agencies, lodges and restaurants in the mountain regions are on the verge of collapse when their financial reserves are used up and the autumn business breaks down.

Ceramic production in Bhaktapur Nepal

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