Agriculture is the mainstay of the economy, providing livelihood for over 80 % of the population and accounting for 41 % of the GDP. Industrial activity mainly involves the processing of agricultural produce including jute, sugarcane, tobacco, and grain. Economic growth has been low, and the growth rate has declined from 3.7 % in 2004 to 1.9 % in 2006, reflecting the problems of political turmoil in the country. Poverty has decreased, according to World Bank figures, from 41.8 % in 1996 to to 30.1 % in 2004; nevertheless poverty remains high.
Exports of goods and services represent only 18.6 % of the GDP. The economy is heavily dependent on imports of basic materials and on foreign markets for its agricultural and forest produce.
Manufacturing sector is very small. Beverages and tobacco products are the most important sectors, accounting for about one quarter of industrial production till recently. However, textile and the apparel industry are the most important sectors in terms of employment, accounting for nearly one quarter of employment in the country.
There is only one project under UNIDO cooperation under way in Nepal as of now, namely, Enabling activities to facilitate early action on the implementation of the Stockholm Convention on Persistent Organic Pollutants (POPs) in Nepal.