The economy is very closely bound to the natural resources (agricultural land, wetlands, forests and protected areas). Agriculture is the mainstay of the economy providing a livelihood for over 80% of the population and accounting for nearly 42% of GDP. Tourism and exports of carpets and textiles are key sources of foreign exchange (respectively 11% and 70%). Tourist arrivals in 1999 numbered over 420,000, but the expected annual growth rate of 8-10% has suffered greatly during the ongoing civil unrest.
In 2002 (NBS 2002) land use was estimated as:
Forests: 29% (4.27 m hectares), average annual deforestation rate 1.7%
Scrubland and degraded forest: 10.6% (1.56 million hectares)
Grassland: 12% (1.7 m hectares)
Cultivated farmland: 21% (3.2 m hectares), principal crops rice, maize, wheat, millet and potatoes
Uncultivated land: 7% (1.0 m hectares)
Others: 20.3% (4.72 m hectares)Of the agricultural land 55.7% is in Terai, 37.3% in the Hills, and 6.9% in the Mountains.