Untapped potential

The visit of Nepali prime minister to China has ushered in a new era of cooperation between the two countries
Nepali economy is passing through a critical phase characterized by poverty and stagnation. The economy suffers from sluggish growth, with rising inflation and growing unemployment resulting in ‘stagflation’. With a diminutive size of GNP (US$ 20 billion) and low GNI per capita (US$ 772), Nepal today is the second poorest country in the world. The IMF says even in 2020 Nepal will remain the poorest country in South Asia. ADB and Nepal government recently revised down annual growth rate to between 1.5 and 2 percent. Inflation, too, is hovering at around a troubling 12.1 percent, as of Jan 2016.
The current vulnerable economic situation is attributed to last year’s devastating earthquakes, with the damages from it worth as high as US $10 billion, which is 50 percent of GDP. The economy further suffered during the prolonged protests in the Tarai, followed by India’s blockade, resulting in acute shortage of petroleum products, cooking gas, medicines and other essential commodities.