A country's Gross Domestic Product (GDP) is the total market value of all finished goods and services produced within its borders over a specific period, typically a quarter or a year. It is the most common measure of a country's economic health and size, calculated by summing the total value of production, income, or expenditure.
We are exploring Nepal’s GDP from the year 2011 to 2022 based on the reports published by the NSO sourced here.
In this article, we will be breaking down the numbers and percentages over the years of a modest, but volatile economy of Nepal from the fiscal year 2011/12 to 2021/22 AD.
Decade at a Glance: The GDP Timeline
If we observe Nepal’s economy over time, trends show that we have been in an upward trend, with the GDP strengthening per year by an average of 4.22% every year despite high unemployment rates and political instability. In comparison, the GDP growth rate of India over the same time period was 6.7%, sourced by Gemini.
As shown by the graph, we clearly observe a consistent upward trend over time. Even in trying times of the Gorkha earthquake and COVID-19 lockdown, the economy, though it slowed down, recorded consistent numbers to carry the upward trend.
But the major finding is in change per year, the chart below displays our breaks in momentum and hints to two major economic slow-downs in the 10-year frame. Namely the events being the massive 7.8 scale earthquake of 2015, which debilitated our infrastructure, and COVID-19 in 2020 where our service industry was critically affected.
The percentage change chart shows that our GDP improvement rates slowed during the earthquake when infrastructure was compromised. The chart also showcases a record-high bounce back in the subsequent year, jumping to 7.37% increase over last year. However, this metric is skewed as the margin is bigger when the actual value of GDP just shifted to NRs. 2.3 million to NRs. 2.7 million. The bounce back indicates most industries were not influenced in the long term by the Gorkha earthquake of 2015.
The COVID-19 lockdown is the worst decline in the economy as compared to previous years. Months of quarantine resulted in stoppage in import/exports and local businesses. A global shutdown meant that remittance also reduced drastically. We may assume that reduction in remittance was the primary factor for the significant −2.4% loss in GDP that year. Despite that, some sectors carried on, namely the health and telecommunications sectors which not only showed excellent resistance, but reported profits when all other industries were crippled.
We shall discuss these industries independently, observing how crises affected them and how they preserved momentum in the long run.
Deep Dive: The Industries of Nepal
Produce & Farm
Inculcating Agriculture, forestry and fishing.
The Agriculture sector, despite being a crucial source of produce, has been a notable example of a crippled industry due to Nepal’s unchanging reliance on import-based produce and lack of investment. While the sector has improved its monetary position, increasing from NRs. 645 billion in 2011/12 to NRs. 1.38 trillion as of 2022, it is rapidly losing its presence in the overall economy. Agriculture's contribution to domestic produce has declined by 9.5% in just over 10 years, falling from 33.4% to 23.9% of the GDP. The sector's performance remains heavily dependent on seasonal monsoon patterns and faces persistent challenges related to low mechanization, fragmented land holdings, and market access. The 2015 earthquake caused immediate losses in stored grains, livestock, and essential irrigation infrastructure, forcing a temporary dip in production. Despite these constraints, the sector demonstrated resilience during the COVID-19 lockdowns, as rural subsistence farming provided a crucial social safety net, which minimized the pandemic’s overall economic shock in rural areas compared to the urban service economy.
Resource Extraction
Inculcates Mining & Quarrying
The Mining & Quarrying sector remains one of the smallest contributors to Nepal’s GDP, with its trend reflecting a limited focus on large-scale mining, mostly revolving around quarrying construction materials like stone, sand, and gravel. While the sector grew from contributing NRs. 8 billion (about 0.59% of the economy) in 2011/12 to NRs. 23 billion in 2021/22, its share of the total GDP has decreased to 0.005%. The decade saw a surge in demand, as the value of the industry rose by NRs. 2.1 billion following the 2015 earthquake, driven by massive reconstruction efforts. This activity peaked in the post-earthquake years, providing a small but steady boost to the industrial component of GDP. However, growth is often constrained by regulatory hurdles, environmental concerns, and challenges in logistics and transportation across the mountainous terrain, preventing it from realizing its full potential as a substantial industrial driver.
Manufacturing
The Manufacturing sector in Nepal, which typically covers a range of small and medium enterprises including carpets, garments, cement, and processed foods, has been one of the most dramatically hit examples in crises, reflecting its structural bottlenecks such as reliance on imported raw materials, high transportation costs, and labor issues. The sector experienced sharp disruptions following major shocks: the earthquake compromised production facilities and supply chains, and the COVID-19 lockdowns effectively halted production for months. These crises resulted in massive declines of 10% and 15% in 2015 and 2020, respectively. Despite these big hurdles, the sector has retained confidence and quickly shot back up to normal in both instances, with the industry showing a NRs. 21.9 billion surplus the year after the earthquake and a NRs. 32.2 billion surplus the year after COVID-19. A notable post-COVID recovery was observed, often fueled by renewed domestic demand and increasing installed hydropower capacity. Manufacturing is carrying on this momentum, contributing to NRs**. 231.7 billion** in the FY 2021/22, making up 0.056% of the GDP. This share has remained relatively stable, as the sector's share in FY 2011/12 was 0.58%.
Utilities
Inculcates Electricity, Gas, Steam, Air Conditioning Supply
The Utilities sector in Nepal, primarily driven by hydropower generation, represents a significant growth story and has shown a consistent positive trajectory over the decade. At the start of the decade, utilities contributed to 0.009% of the economy, but by 2022, this contribution had grown to 0.013%, adding NRs. 56 billion worth of value to the GDP. Historically, the country suffered from massive load-shedding, which severely impacted all other industries. This growth is a tell-tale sign of hydropower generation contributing directly to the GDP, reflecting the steady investment and commissioning of large-scale hydropower projects, notably the Upper Tamakoshi project. This structural shift has been dramatic, effectively turning Nepal into an energy-surplus nation in certain seasons by the end of the 2021/22 fiscal year. This robust GDP growth is evident not only in the sector's direct output but also in the increased productivity and efficiency it enables across the entire economy, particularly in the manufacturing and service sectors.
Environmental Services
Inculcates Water Supply, Sewerage, Waste management, Remediation Activities
The Environmental Services sector, while small in terms of its direct GDP share, holds immense importance for public health and urban development and has shown stable and uninterrupted growth, more than doubling its contribution from NRs. 9.9 billion to NRs. 21 billion. Its growth over the decade reflects increasing urbanization and a growing focus, often supported by international development partners, on improving urban infrastructure, with growth characterized by investment spikes related to major projects like large-scale drinking water supply schemes in the Kathmandu Valley. Unlike many other sectors, these services are generally non-cyclical, providing a consistent, albeit minor, contribution to GDP even during national emergencies, as highlighted by its consistent performance, including 2.15% growth during the 2019/20 pandemic, irrespective of the broader economic climate.
Construction
The Construction industry's narrative over the past decade is one of a boom driven by reconstruction and infrastructure ambitions, nearly tripling its value from NRs. 92.6 billion to NRs. 253.4 billion by FY 2021/22. This sector, which is a vital indicator of both public and private investment, began with steady activity, but the 2015 earthquake caused a temporary paralysis, leading to a −2.95% dip in that year. This was immediately followed by a massive, multi-year boom driven by reconstruction activities (housing, schools, hospitals) and large public infrastructure projects (roads, hydropower). This post-earthquake surge saw the sector post 18.68% growth in 2016/17 and jump in value by NRs. 31.2 billion in a single year, contributing significantly to the country's high GDP growth rates. While the COVID-19 pandemic caused a major setback due to labor shortages and supply chain disruptions, resulting in a minor slowdown with a −4.39% contraction, the sector quickly regained its footing with 5.19% growth the following year once mobility restrictions were eased.
Trade & Repairs
Inculcates Wholesale, Retail trade, Repair of motor vehicles
The Trade & Repairs industry, as the second largest service sector contributor to the economy, acts as a clear indicator for consumer confidence and a key transmission mechanism for foreign earnings into the domestic, predominantly consumption-based, and remittance-reliant economy. This sector's stability throughout the decade underscores its robust consumer base, though its fortunes are tightly linked to the volume of imports. It was severely hit by two major shocks: first experiencing a −2.56% contraction during the 2015/16 economic blockade and then suffering a further −11.39% dip in 2019/20 with the onset of the COVID-19 pandemic, which erased NRs. 28 billion from its value due to the restriction on the movement of goods and people. Despite these setbacks, the sector's recovery tends to be swift, reflecting pent-up consumer demand and the consistent flow of remittances. The recovery was immediate and immense, recording a massive NRs. 69.4 billion surplus and growing by 13.48% in the year immediately following the pandemic slump. This momentum has continued, with the industry contributing NRs. 673.1 billion in FY 2021/22, underscoring the rapid return of consumer demand.
Logistics
Inculcates transportation, Storage
The Logistics industry, which is critical for connecting Nepal’s dispersed populations and facilitating trade while reflecting the challenges of being a landlocked country, has faced dual shocks over the last decade. Its growth has been historically challenged by high operating costs, poor road quality, and dependency on international transit points. The sector experienced major declines during two key crises when internal and external transportation was halted: first seeing a sharp −5.73% decline in growth in FY 2015/16 due to the economic blockade, and then an even steeper fall of −11.79% during the COVID-19 pandemic in FY 2019/20. The pandemic-induced lockdowns wiped out NRs. 35.4 billion from the sector, shrinking its Gross Value Added from NRs. 215.8 billion to NRs. 180.3 billion. Despite this volatility, the rebound has been swift and powerful, signaling a full-scale resumption of economic mobility and supply chains. In the two years following the pandemic, the sector not only recovered but soared to a new high, adding NRs. 65.1 billion to contribute a total of NRs. 245.4 billion in FY 2021/22, with long-term growth supported by government investment in national highways and the increasing use of technology for inventory and freight management.
Hospitality
Inculcates Accommodation, Food Service Activity
The Hospitality Service sector, which serves as a proxy for tourism, stands out as the most volatile and was the most severely impacted industry during national crises. It was devastated by the 2015 earthquake, which damaged heritage sites and trekking routes, causing a severe drop in international arrivals. The sector began a strong recovery mid-decade, only to face an unprecedented collapse during the COVID-19 pandemic. As international travel came to a standstill, the sector witnessed a staggering −36.78% contraction in the fiscal year 2019/20, translating to a loss of NRs. 25.2 billion in a single year, with its contribution plummeting from NRs. 75.6 billion to NRs. 50.4 billion. This collapse was due to international travel restrictions that led to near-zero revenue for nearly two years. However, the industry has shown remarkable resilience in its recovery. The 2021/22 fiscal year marked the initial, tentative stages of this recovery with a slow but steady return of domestic and eventually international tourists. It bounced back with 16.5% growth the following year, injecting an additional NRs. 8.3 billion back into the economy, and has since continued its upward trajectory to contribute to NRs**. 67.9 billion** in FY 2021/22, nearing its pre-pandemic peak and signaling high potential for future growth once global travel normalizes.
Media & Telecom
Inculcates Information, Communication
The Information and Communication sector has been a pillar of stability and consistent growth, reflecting the modernizing face of the Nepalese economy and proving its resilience during national crises. Driven by the rapid adoption of mobile technology, expanding internet penetration, and the digitalization of services, the industry's value has steadily climbed from NRs. 31.4 billion to NRs. 83.2 billion throughout the decade. Its resilience was particularly evident when other sectors contracted: during the 2015 earthquake, this industry grew by 6.88% as digital connectivity became essential for business continuity, government coordination, and education, leading to spikes in data consumption and infrastructure investment. Although the growth rate slowed to 1.69% during the 2015/16 blockade and a further 3.8% during the 2019/20 pandemic, the latter year's lockdowns ultimately accelerated the shift to digital platforms, underscoring the unstoppable trend of digitization in the economy.
Financial Services
Inculcates Finance, Insurance Activities
The Finance and Insurance sector has proven to be a resilient engine of the economy and one of the most stable service pillars, nearly quadrupling its contribution from NRs. 68 billion to NRs. 281.6 billion over the decade. This robust growth has been largely underpinned by high liquidity, provided by stable remittance inflows, and a growing urban middle class seeking mortgages and consumer loans. Playing a crucial role in mobilizing savings and financing investment, the sector's essential role and the increasing financialization of the economy are undeniable. It faced systemic risk briefly after the 2015 earthquake due to concerns over asset quality and insurance payouts, and again during COVID-19 lockdowns due to non-performing loan risks. However, prudent regulation and strong remittance flows ensured its continued solvency and ability to maintain growth, even posting a 3.63% increase during the first year of the pandemic, cementing its status as a cornerstone of the service sector that facilitates growth and investment across all other industries.
Real Estate
The Real Estate sector, including dwelling ownership, contributes a substantial percentage to Nepal's GDP and has been a source of steady, consistent growth, more than doubling its contribution from NRs. 143.4 billion to NRs. 360.6 billion over the decade. Despite experiencing significant volatility—including heated activity followed by regulatory caps on speculative lending leading up to 2015, and a massive, immediate contraction in market sales due to the Gorkha earthquake—the sector has demonstrated remarkable stability against major economic shocks. It maintained positive growth, reporting a 0.39% growth rate even through the earthquake and subsequent blockade of 2015. This contraction was quickly followed by a long-term boom in property valuation and construction activity related to government-led reconstruction and private rebuilding, making it a major economic stimulus post-2015. Furthermore, through the COVID-19 pandemic, the market remained unfazed, posting a 2% growth rate in 2019/20, highlighting its reliable, albeit slower-growing, role as a foundational component of the national economy.
Professional Services
Inculcates Professional, Scientific, Technical Activities
The Professional Services sector, which encompasses legal, accounting, consulting, and architectural services, has nearly quadrupled its value over the decade, growing from NRs. 12.2 billion to NRs. 40.7 billion. This growth is a reflection of the overall increase in business formalization and complexity within the maturing economy, where businesses require increasingly specialized, high-value technical support. The sector gained particular prominence following the 2015 earthquake due to the high demand for structural assessment, engineering, and urban planning services related to the massive reconstruction drive. While the COVID-19 pandemic caused a temporary dip, the sector demonstrated resilience with only a minimal contraction of 0.08%. The long-term upward trend quickly reasserted itself, with a strong bounce-back growth rate of 2.37% the following year, indicating a strong and increasing underlying demand for these essential professional services.
Business Support
Inculcates Administration, Support Service
The Administrative and Support Service sector, often considered a proxy for the health of small and large enterprises by covering everything from rental and leasing to general office administration, has seen an exponential increase in its contribution, soaring from NRs. 5.6 billion to NRs. 32.1 billion over the decade. Its performance is heavily correlated with the growth of the Trade, Manufacturing, and Hospitality sectors. However, the sector proved vulnerable to large-scale disruptions: it suffered immediately and severely during the periods of lockdown in 2020 as non-essential office activities ceased, highlighting its susceptibility to disruptions in mobility and commerce. This crisis killed the momentum seen in the years prior, and in 2019/20, as business operations were curtailed, the growth rate grinded to 2.19%. Following this shock, the sector made a sharp rebound with a 15.83% growth rate in the two years that followed, reflecting the broader economic reopening and the swift resumption of business services.
Government Service
Inculcates Public Administration, Defence, Compulsory Social Security
The Public Administration and Defence sector, essentially the Government Service sector, has been a key stabilizing and counter-cyclical force in the national accounts. Its contribution has grown five-fold over the decade, increasing from NRs. 64 billion to NRs. 317.2 billion. Its generally steady contribution to GDP, reflecting public sector salaries and administrative costs, proved crucial during national crises. This sector was instrumental in coordinating earthquake relief and post-disaster reconstruction, and it maintained essential services and enforcement during the COVID-19 pandemic. This consistency, including a significant 26.5% expansion during the 2019/20 pandemic year, underscores the vital role of public spending in providing economic stability and acting as a crucial economic floor when private sector activity collapsed.
Healthcare and Social Support
Inculcates Human Heath, Social Work Activities
The Human Health and Social Work sector has seen its economic contribution more than quadruple over the last decade, a trend significantly accelerated by national crises. This sector, while having a modest overall GDP share, became particularly notable in the second half of the decade as its growth accelerated due to increased public and private spending on health infrastructure. The Gorkha earthquake necessitated the significant rebuilding of health posts and hospitals, contributing to this growth. Crucially, the COVID-19 pandemic placed immense pressure on the sector, leading to a massive acceleration of its growth. The increased demand for healthcare services led to exceptional growth rates of 5.2% in 2019/20 and a further 6.6% in 2020/21, making it one of the few sectors that demonstrated aggressive growth during the nationwide lockdown due to heightened investment, procurement, and employment. This surge has pushed the sector's total value from NRs. 60.3 billion to NRs. 73.6 billion from 2020 to 2022, underscoring the growing importance of and investment in the nation's health infrastructure.
Creative Industries
Inculcates Art, Entertainment, Recreation
The Creative Sector, encompassing cinema, sports, and cultural activities, has demonstrated remarkable resilience and growth, despite being highly susceptible to public confidence and mobility restrictions. In the period leading up to the Gorkha Earthquake, it was already a high-grossing industry, reporting a record-high growth rate of 8.72% and increasing its value from NRs. 9.9 billion to NRs. 11.6 billion. Fueled by rising disposable incomes, this sector experienced steady, urban-led growth in the pre-pandemic years. However, as it is highly dependent on public gathering, the COVID-19 pandemic caused one of the sharpest contractions, forcing the closure of theaters, stadiums, and entertainment venues. Despite this significant shock and near-total shutdown, the sector managed to stay net positive with a 1.77% growth rate. Its recovery in 2021/22 was slow but signaled a return to cultural consumption as health risks lessened, indicating a prolonged path to becoming a decorated industry; as of 2022, the industry is valued at NRs. 24.8 billion and is projected to continue growing.
Conclusion: The Climb Ahead
The analysis of Nepal's GDP across the 2011/12 to 2021/22 fiscal years paints a picture of determined growth amidst significant volatility. We confirmed the overall upward trajectory, with an average growth rate of 4.22%, driven primarily by the expanding Service sector, which now constitutes the largest share of the economy. Critically, we identified the counter-cyclical resilience of sectors like Government and the stabilizing role of Remittance-fueled Trade, contrasted with the extreme vulnerability of highly external-facing sectors like Hospitality and Construction to exogenous shocks like the Gorkha earthquake and the COVID-19 pandemic. The rapid rise of the Utilities sector, fueled by successful hydropower projects, is a key structural shift that promises sustained productivity gains for the economy.
Nepal has repeatedly demonstrated profound economic resilience, characterized by a rapid bounce-back capacity following catastrophic events. The post-2015 earthquake recovery and the strong rebound from the 2020 COVID-19 recession highlight the underlying potential of the private sector and the consistent flow of remittances that cushions the economy. However, persistent challenges remain, notably the structural underperformance and susceptibility to weather of the Agriculture sector, the reliance on high-cost imports, and the need for continuous investment in stable physical and digital infrastructure to support sustainable, high-value job creation that can reduce the dependence on foreign employment.
As Nepal transitions from a recovery phase to an ambition for sustained growth, the central question for the next decade becomes: Can Nepal leverage its newfound energy surplus and digital connectivity to fundamentally transform its economic structure, shifting from a consumption-based model, to a service-oriented and industrially sustainable model?
