Nepal’s GDP at Current Prices Crosses Rs. 6 Trillion – What’s Next?

Published on September 24, 2025

Nepal’s economy has reached a symbolic milestone, with GDP at current prices projected to hit Rs. 6.1 trillion in FY 2024/25, up from Rs. 5.7 trillion in FY 2023/24 and Rs. 4.35 trillion in FY 2020/21. This nominal expansion reflects both growth in real output and price effects, but the achievement is significant in signaling the country’s growing economic scale. Crossing the Rs. 6 trillion threshold also positions Nepal’s economy more prominently within South Asia, even though it remains relatively small compared to its larger neighbors.

The growth of GDP at current prices is being supported by several factors. Inflation has eased considerably, with the CPI falling to just 2.20% in FY 2024/25, ensuring that nominal growth is more production-driven rather than purely inflationary. Meanwhile, strong remittance inflows, a surplus in the current account, and expanding foreign exchange reserves (USD 19.5 billion) have stabilized external balances and created a healthier investment environment. These drivers point to a more sustainable phase of nominal growth compared to previous years when high inflation inflated GDP figures.

However, the milestone also raises deeper questions about what’s next for Nepal’s growth trajectory. Despite a rising GDP, per capita income remains modest, and the structure of the economy continues to lean heavily on services and remittance-driven consumption rather than on domestic production and industrial expansion. Gross Fixed Capital Formation has dropped to 24.1% of GDP, showing weak investment in long-term productive assets, while capital expenditure execution remains below potential at just 3.6% of GDP. Without stronger industrial growth and infrastructure development, crossing Rs. 6 trillion risks becoming more of a symbolic achievement than a transformative shift.

Looking ahead, sustaining momentum will require Nepal to channel high savings (36.2% of GDP) into productive domestic investments, stimulate exports beyond traditional goods, and accelerate public infrastructure delivery. The Rs. 6 trillion milestone should thus be seen not as an endpoint but as a starting point for building a stronger, more balanced economy that can deliver higher productivity, better jobs, and sustainable income growth.

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.