Comparing GDP Growth in Nepal: 2020/21 to 2082/83 Trends

Nepal’s GDP growth trajectory over the past five years reflects a cycle of recovery, slowdown, and cautious stabilization. In FY 2020/21, real GDP at purchasers’ price expanded by 4.8%, supported by post-pandemic reopening and remittance-driven consumption. Growth accelerated further to 5.6% in FY 2021/22, marking the strongest performance of the period. However, the momentum was short-lived, as the economy slowed sharply to just 2.0% in FY 2022/23, dragged down by global uncertainties, weak domestic investment, and supply-side disruptions.

The following years show gradual recovery. In FY 2023/24, growth improved to 3.7%, and by FY 2024/25, projections suggest 4.6%, signaling that Nepal is regaining stability. For early FY 2082/83 (2025/26), the trend points toward continued resilience, though growth remains below the 6–7% benchmark needed for transformative economic expansion. Nominal GDP also tells an important story, rising from Rs. 4.35 trillion in 2020/21 to over Rs. 6.1 trillion in 2024/25, reflecting not only real production gains but also inflation and external inflows.

A closer look at the drivers explains the fluctuations. The early recovery (2020/21–2021/22) was fueled by remittance growth and service-sector expansion, while the slowdown in 2022/23 reflected weak fixed capital formation and sluggish industrial performance. The gradual rebound in 2023/24–2024/25 has been supported by easing inflation (down to 2.2% in FY 2024/25), stronger exports (up 81.8%), and rising foreign exchange reserves (USD 19.5 billion). Yet, structural weaknesses remain, particularly the sharp decline in Gross Fixed Capital Formation (from 29.3% of GDP in 2020/21 to 24.1% in 2024/25) and continued reliance on remittances to sustain savings and consumption.

The comparison highlights a key lesson: Nepal’s growth has been resilient but fragile. Short-term external support has stabilized the economy, but long-term transformation requires greater domestic capital formation, industrial diversification, and better utilization of public investment. Without these, GDP growth will hover around 4–5%, sufficient for stability but insufficient for structural change.