The unemployment rate has been consistently above 10 per cent for over three decades. It stood at 10.7 per cent in 2024. Meanwhile, it was 4.3 per cent for South Asia and 4.9 per cent for the world, according to the World Bank.
The economic output of Nepal is weak, a fact that’s clearly visible in its low per capita GDP. In 2024, it was only Intl$5,737, nearly half of the South Asian average and one-fourth of the global average.
A high unemployment rate and low economic output are evident when examining Nepal’s investment data. Its gross fixed capital formation or investment was equivalent to 33.8 per cent of GDP in the financial year 2014. It fell to 28.98 per cent in 2022 and 24.45 per cent in 2024, according to Nepal’s Finance Ministry. While investments declined, public debt rose, from 26.54 per cent in 2018 to 40.46 per cent in 2022, and further to 42.65 per cent in 2024.
High debt sometimes leads to higher investment. But that was not the case with Nepal. As debt rose, capital expenditure remained benign. From 7.83 per cent of the GDP in FY2018, capital expenditure fell to 3.36 per cent in 2024. However, the financing expenditure rose from 3.46 per cent to 4.64 per cent in the same duration.