Real vs Nominal GDP: Understanding Nepal’s 2082/83 Growth Trend

Published on September 24, 2025

Nepal’s growth outlook for FY 2082/83 (2025/26) can be better understood by comparing real GDP and nominal GDPtrends. Real GDP, which adjusts for inflation, reflects the true increase in the country’s production of goods and services. For FY 2024/25, Nepal’s real GDP at purchasers’ price is projected to grow by 4.6%, up from 3.7% in FY 2023/24 and only 2.0% in FY 2022/23. This signals that the economy is gradually recovering in terms of actual production capacity, fueled by improved remittances, better trade performance, and lower inflation.

On the other hand, nominal GDP, which is measured at current prices without adjusting for inflation, is projected to grow by 7% in FY 2024/25. While this figure is higher than real GDP growth, much of the difference reflects price effects rather than increased production. For example, in previous years, nominal GDP surged by 14.3% in FY 2021/22, but real GDP only grew by 5.6%, meaning that inflation contributed significantly to the expansion. The recent moderation of inflation—falling from 8.08% in FY 2021/22 to just 2.20% in FY 2024/25—has narrowed the gap between nominal and real GDP growth, showing that Nepal’s growth is becoming more production-driven rather than inflation-driven.

This distinction is crucial for policymakers and investors. Real GDP indicates whether economic activities are expanding in substance, creating jobs, and boosting output, while nominal GDP captures the overall value of the economy at current market prices. The improvement in real GDP alongside stable nominal growth in FY 2082/83 suggests a healthier growth trend compared to past years when inflation artificially inflated nominal figures. The challenge, however, remains in sustaining real growth by improving capital formation, enhancing productivity, and channeling public investment into infrastructure and innovation.

Policy Lessons from India: Can Nepal Control Inflation More Effectively?

India has kept inflation relatively moderate through strong agricultural systems, buffer stocks, and inflation-targeting policies, while Nepal has historically struggled with food-driven volatility. Nepal’s CPI fell below India’s in 2025/26 for the first time in four years, but to sustain this trend, Nepal must strengthen supply chains, adopt buffer policies, and set clearer inflation targets.

Inflation Convergence in South Asia: What Nepal-India CPI Data Reveals

Nepal and India’s inflation rates, once far apart, have gradually converged—Nepal’s CPI dropping from 7.74% in 2022/23 to 1.68% in 2025/26, while India’s remained steadier around 2–5%. For the first time in four years, Nepal’s inflation fell below India’s, highlighting both shared regional cycles and unique domestic vulnerabilities.

Nepal vs India: Monthly CPI Comparison and Regional Economic Impact

Nepal’s inflation fell to 1.68% in August 2025/26, below India’s 2.07%, reversing a four-year trend. While both economies share similar seasonal inflation cycles, Nepal’s sharper food-driven spikes contrast with India’s steadier, monsoon-driven patterns. Regionally, this convergence impacts household costs, trade competitiveness, and economic stability.

Inflation Gap Narrows: Nepal’s Deviation with India Falls to -0.39% in 2025/26

In August 2025/26, Nepal’s CPI stood at 1.68%, lower than India’s 2.07%, with the inflation deviation dropping to -0.39% for the first time in four years. While Nepal gained from falling food prices, India’s inflation stayed higher due to agricultural pressures, though both countries continue to face rising service costs.

Cross-Border Inflation Trends: How Nepal and India’s Prices Move Together and Apart

Nepal and India’s inflation trends usually move in sync, reflecting shared regional and global factors. But in August 2025/26, Nepal’s inflation (1.68%) fell below India’s (2.07%) for the first time in four years, thanks to easing food prices in Nepal, while India faced higher agricultural pressures.

Nepal vs India Inflation 2025/26: Why Nepal’s CPI Fell Below India’s for the First Time

In August 2025/26, Nepal’s inflation dropped to 1.68%, falling below India’s 2.07% for the first time in four years. While food price declines drove Nepal’s slowdown, India’s inflation held slightly higher due to agricultural pressures. However, Nepal’s service costs remain a long-term challenge, even as headline CPI looks favorable.