Pakistan vs. Nepal: A Tale of Two Economies

While both Pakistan and Nepal are part of the South Asian region, these two countries have drastically different economies. In fact, according to the World Bank’s 2018 report, Nepal has more than double the Gross Domestic Product (GDP) per capita of Pakistan, which means it’s probably much easier to start your own business in Nepal than in Pakistan. Here’s how the economic situation in both countries stacks up.

The GDP

Pakistan's GDP is $313.6 billion, while Nepal's GDP is only $27.4 billion. Pakistan's economy is thus about 11 times larger than Nepal's economy. However, when we look at the GDP per capita, we see a different story. Pakistan's GDP per capita is only $1,497, while Nepal's GDP per capita is $2,016. This means that, on average, each person in Nepal has a higher standard of living than each person in Pakistan. The trade balance also highlights this difference. Pakistan imports more goods than it exports ($32.5 billion worth of imports and $19.7 billion worth of exports), while Nepal exports more goods than it imports ($11.8 billion worth of imports and $9.7 billion worth of exports). 

In addition to this economic disparity, there are other socio-economic differences between these two countries as well.

Per Capita Income

Nepal and Pakistan are two countries in Asia with very different economies. As of right now, Pakistan's economy is much stronger than Nepal's. This is due, in part, to Pakistan's higher per capita income. In 2018, Pakistan's per capita income was $1,356 while Nepal's was only $650. This difference is significant because it means that, on average, Pakistanis have more money to spend on goods and services than Nepals do. Pakistan also has a higher GDP than Nepal.

Foreign Direct Investment

Pakistan and Nepal are two countries in Asia with very different economies. Pakistan's economy is currently booming, while Nepal's is struggling. The main difference between the two economies is foreign direct investment (FDI). Pakistan has attracted a lot of FDI in recent years, while Nepal has not. This has resulted in Pakistan's economy growing much faster than Nepal's. If Nepal could attract more FDI, its economy would likely improve significantly.

Government Debt

The economy of Pakistan is the 24th largest in the world in terms of purchasing power parity (PPP), and 43rd largest in terms of nominal gross domestic product. Pakistan has a population of over 207 million (the world's 6th-largest), giving it a nominal GDP per capita of $1,429, which ranks 147th in the world and making it one of the lower-middle income countries. However, Pakistan's average economic growth rate since its inception has been higher than the average growth rate of the world economy during the same period. 

Nepal's economy is mostly agricultural with about 80% of the population engaged in subsistence farming.

Electricity Supply

The economies of Pakistan and Nepal are quite different. Pakistan is a much larger country with a population of over 200 million. Its economy is also much more diversified, with agriculture, manufacturing, and services all playing a role. In contrast, Nepal is a smaller country with a population of just over 27 million. Its economy is heavily reliant on agriculture, with around 60% of the population working in this sector. Additionally, about 80% of its exports are based on agricultural products. Pakistan's economy, however, is doing much better than Nepal's at the moment because it has taken measures to tackle its economic problems. 

In 2014-2015 Pakistan had an economic growth rate of 3%, while Nepal had only 0.3%. Pakistan is moving away from being a heavy agricultural state and focusing more on industry and services; as a result it has been able to see an increase in foreign investment as well as positive growth rates. In comparison, Nepal continues to rely on agricultural exports but hasn't seen any improvement economically or socially since 2015 when it had its worst earthquake ever recorded that killed nearly 9 000 people and displaced millions more

Unemployment Rate

As of right now, the unemployment rate in Pakistan is 6.2% while the unemployment rate in Nepal is 3.5%. Both of these economies are in Asia, but they have different levels of development. Pakistan's economy is larger and more diversified, while Nepal's economy is smaller and relies more on agriculture. Nepal also has a higher poverty rate than Pakistan. About one third of Pakistanis live below the poverty line as opposed to half of Nepalese citizens. The literacy rates are roughly equivalent between Pakistan and Nepal, with both countries being at around 65%.

Average life expectancy

Asia's economy is currently in a state of flux, with countries like Pakistan and Nepal feeling the effects. So, what exactly is the difference between the two economies? Pakistan’s GDP was $1.7 trillion as of 2017, while Nepal’s was $69 billion. With an average life expectancy of 66 years, Pakistan’s economy ranks 181st out of 228 nations on the Human Development Index (HDI). On the other hand, this number for Nepal is 60 years – meaning it ranks 159th out of 228 nations on HDI. The unemployment rate for Pakistan is 6% compared to just 1% for Nepal and their literacy rates are 79% and 71%, respectively.

Inflation rate

The inflation rate is the percentage change in a price index over time. The consumer price index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI for Pakistan was 3.3% in 2016, while the CPI for Nepal was 6.5% in 2016. Pakistan's GDP growth has also been lower than that of Nepal, with Pakistan experiencing 4.7% GDP growth in 2017, compared to 7.6% GDP growth for Nepal in 2017.