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

Published on September 24, 2025

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.

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.