2014 Trade and Investment Profile
Nepal is a landlocked, mountainous country in South Asia situated between India and China. With a population of 28 million and an estimated gross domestic product (GDP) of US$700 per person, Nepal is classifed as a low-income country.
Nepal is vulnerable to multiple natural hazards. Its varied and extreme topography and weather result in annual floods and landslides, causing loss of life, assets and livelihoods. In addition to these risks, Nepal faces considerable conflict and governance challenges. The country is undergoing a complex political transition following a 10-year armed conflict between 1996–2006, in which about 16,000 people lost their lives and thousands more were injured or displaced.
Nepal’s path to development was struck by the earthquakes that hit the country in April and May 2015. The damage was widespread in Kathmandu, the capital city, and across a wide swathe of rural areas. The confirmed death toll stands at over 8,800, with more than 22,000 people injured. The earthquake affected over 8 million people, or one-third of the country’s population, and close to half a million houses were destroyed.
Rebuilding is expected to provide many opportunities for investment. Infrastructure remains one of the main weaknesses of the country, although Nepal improved its performance especially in terms of access to electricity through hydro-electric generation. Given its landlocked nature and the orographic conditions of the territory, Nepal remains poorly connected to its neighbors and therefore cut out from access to the sea. This makes it extremely difficult for the country to join global value chains and build a manufacturing sector. Large parts of the country are still far from paved roads that allow connection throughout the year.
While posing serious problems for connectivity, Nepal’s mountainous nature could also be one of its main sources of prosperity, allowing for easy production of hydroelectric power.
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