Nepal’s macroeconomic landscape in FY2024/25 reflects an economy at a crossroads. On one hand, record remittance inflows have bolstered the external position, leading to a sizeable balance of payments (BoP) surplus and swelling foreign exchange reserves. On the other hand, structural challenges persist: credit growth has only cautiously rebounded after a slump, service-sector outflows (for education and travel) are draining foreign exchange, and the country remains heavily reliant on a narrow export base. This report critically examines five key pillars: remittances and BoP, foreign exchange reserves, loan vs deposit trends (financial sector), service trade dynamics (education and tourism), and tourism sector patterns, using the latest data from Nepal Rastra Bank (NRB) and global sources. We apply relevant economic theories (from the Lewis dual-sector model to Thirlwall’s BoP constraint) to diagnose these trends in a regional context, and we conclude with actionable policy recommendations (on forex hedging, productive use of remittances, tourism reform, and export diversification) aimed at steering Nepal toward more sustainable growth.
FY2024/25 Nepal Macroeconomic Review: Resilience, Risks, and Reform Pathways
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