Nepal has dropped one spot to 90th out of 165 countries in the Economic Freedom of the World: 2026 annual report, which was released today by Samriddhi Foundation in collaboration with the Canada-based Fraser Institute.
Nepal scored 6.59 out of 10, where 10 indicates the highest level of economic freedom. Last year, Nepal was ranked 89th with a score of 6.58.
Despite the slight decline in global ranking, the report indicates that Nepal’s economic freedom score has fully recovered from the dip experienced during the COVID-19 pandemic. In 2019, Nepal was 98th with 6.52 points, which fell to 100th with 6.31 points in 2020.
Countries with higher levels of economic freedom generally experience greater prosperity, political and civil liberties, and longer life expectancies, according to research published in peer-reviewed academic journals. For instance, the top 25 percent of economically free countries (including the United Kingdom, Japan, and Ireland) had an average per capita income of USD 65,596 in 2024, compared to USD 9,552 in the bottom 20 percent (including Venezuela, Iran, and Sudan).
Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute, stated that people live more prosperous, happier, and healthier lives where they are free to pursue opportunities and make their own decisions.
Key Indicators and Performance
The report evaluated 165 countries across five major areas. Nepal’s scores and rankings declined in several key indicators:
- Size of Government: fell from 49th (7.29 points) to 51st (7.25 points).
- Legal System and Security of Property Rights: dropped from 91st (4.92 points) to 96th (4.82 points).
- Access to Sound Money: despite an increase in score, the ranking fell from 96th (7.37 points) to 101st (7.57 points).
- Regulation: decreased from 37th (7.12 points) to 50th (6.90 points).
However, Nepal improved in the Freedom to Trade Internationally, moving from 126th (6.21 points) to 117th (6.39 points). Out of 24 sub-indicators under the five major areas, Nepal improved in seven, declined in six, and maintained its position in eleven.
Global Context and Nepal’s Economic Challenges
Hong Kong maintained its top position globally for economic freedom, followed by Switzerland, Singapore, New Zealand, the United States, Ireland, Denmark, Australia, and Mauritius. Finland, Netherlands, and the United Kingdom shared the tenth spot. Venezuela ranked last among the 165 countries.
Nepal faces broader macroeconomic challenges, including a slowdown in economic growth. The National Statistics Office reported that Nepal’s economic growth rate declined to 3.9 percent in the fiscal year 2082/83 (2025/26), down from 4.4 percent in the previous fiscal year. This was primarily due to a deceleration in agricultural sector growth, from 3.0 percent to 1.6 percent.
Adverse weather conditions, such as drought during paddy transplantation in Madhesh Province and excessive rainfall during the October 2025 harvest, led to a 4.2 percent contraction in paddy production. Madhesh Province has been the weakest performer in economic growth and per capita GDP for the current fiscal year 2082/83, largely due to a significant decline in agricultural output and reduced government spending.
The World Bank’s October 2026 Nepal Development Update also noted institutional and financial challenges, along with the impact of cartels in the transportation sector, hindering competition and economic progress.
Broader Governance and Future Outlook
In related news, Speaker of the House of Representatives Dol Prasad (DP) Aryal stated on October 2, 2026, that it is parliament’s duty to hold the executive accountable and ensure the government answers questions. Prime Minister Balen Shah was scheduled to answer questions from lawmakers monthly, but this was postponed due to the Bhote Koshi flood. Speaker Aryal departed for Tanzania on October 5, 2026, to attend the 153rd General Assembly of the Inter-Parliamentary Union (IPU), where he plans to address Nepal’s issues of disaster and climate change.
