Impact of Novel Corona Virus (COVID-19 or 2019-nCoV)

on Nepalese Economy

Jyoti Koirala, PhD

Email: get2jyoti@gmail.com
&
Suman Acharya, PhD
Email: sumanacharaya@gmail.com

Natural calamities i.e. earthquake, viral flue, tsunami may challenge any human creation.
Science is important for mankind but is not panacea to solve all problems. Emerging disaster
is more devastating than historical disaster. Almost all countries of the world have fully or
partially locked the country down. It has questioned ongoing chain of economics and their
agencyship. A mobility of human being is almost stocked. The chains of fiscal and monetary
sectors are temporarily discontinued. All economic agents are passive. This scenario further
necessitates the re-emergence of primary sector economy for the realization of basic needs of
the mankind. However, it is not the time to be self-centric rather global fraternity and
cosmopolitanism is continuously necessary.

If we review the history, the Plague of Justinian, Black Death, Great Plague of London, Small
Pox and Cholera claimed the life of billions. The Plague of Justinian claimed the life of thirty
million to fifty million populations, which was almost fifty percent population of that time
whereas Black Death claimed the life of two hundred million people of Europe. Moreover,
Great Plague of London killed twenty percent population of city whereas Small Pox claimed
the life of three out of ten persons in Asia, Europe and Arabic country. Cholera also claimed
many people in the history. On such pandemic disease, isolation, quarantine and sanitations
methods were used. Later, medication system was gradually developed. Now, Corona virus
emerged in same fashion which may claim uncountable populations if it is not controlled
effectively.

Electronic copy available at: https://ssrn.com/abstract=3560638

During these pandemic diseases, economic activities will go down and agricultural economy
can be re-established to fulfil the basic needs of people if situation further worsens.

Novel Corona Virus (COVID-19 or 2019-nCoV) is an emerging global health concern that
requires a rapid diagnostic test (Lamb et al., 2010). According to World Health Organization
(2020) “Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the
common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-
CoV) and Severe Acute Respiratory Syndrome (SARS-CoV).” WHO further states that
Coronaviruses are zoonotic, meaning they are transmitted between animals and
people. Detailed investigations found that SARS-CoV was transmitted from civet cats to
humans and MERS-CoV from dromedary camels to humans. Several known coronaviruses are
circulating in animals that have not yet infected humans.

Such outbreak of disaster deteriorate the production capacity. These adverse impacts may
sometimes be fatal to the firms and result in them being forced to close down. No one knows
how long the coronavirus outbreak will last, how far it will spread, or how many lives it will
claim. It is impossible to calculate the extent to which it will disrupt China’s economy. But
China’s formidable stature in the world economy means that the impact of the current outbreak
is likely to substantially exceed that of SARS (NY Time, 2020).

Nepal is one of the small countries between India and China. Both India and China are suffering
from the outbreak of Corona Virus. In this situation, the supply shortages are expected in Nepal
as it to affected by panic buying, increased usage of goods to fight the pandemic, and disruption
to factories and logistics in country. Even there have been widespread reports found in literature
review about how supply shortages of pharmaceuticals and essential grocery items.

For the impact on economy, the study of Knobler S, Mahmoud A, Lemon S, et al (2004)
focused impact on costs based on forgone income which is estimated by the value of workdays
lost due to the illness. In the case of mortality, forgone income is estimated by the capitalized
value of future lifetime earnings lost to the disease related death, based on projected incomes
for different age groups and age-specific survival rates. This cost can be substantial for some
epidemics.

Electronic copy available at: https://ssrn.com/abstract=3560638

The main purpose of this study is to explore and understand the overall impact Novel Corona
Virus on Nepalese Economy in 2020. In order to identify the impact of COVID-2019 on
Nepalese Economy, the study tries to find out the overview of economic disaster in Nepal and
how government responding the situation. The study is based on data collected from the experts
who are involved in economic and disaster field.

Table:1 Verbatim Interview Related to Impact of COVID -2019 on Nepalese Economy

Associated First Level Concepts Representative quotation from Interview

Dealing with Outbreak of COVID- Although Nepal is experienced in dealing the

2019
Most affected business houses
Impact of Nepalese Economy
Natural Disaster which has been learned recently
from 2015 Gorkha Earthquake but dealing with
outbreak of corona virus is almost nil.
There is no such preparedness, response and
recovery plan, however Nepal government is trying
its best to control the situation.
Country need to depend on third country for testing
kits and other daily requirements so disaster will be
worse than developed nations.
The situation is worst to the family of people
working directly or indirectly into airlines, hotel and
restaurant industries in Nepal especially in tourism
sectors.
Some business revivals and staff supportive plans
are required. Due to non-availability of guests, such
businesses are closing down.
Not only tourism industry, but even the other
companies like manufacturing, supply change and
transportation industry have been affected badly.
Nepal is fully dependent on other countries so high
impact on supply chain and import.
The economic and social isolation cost will be higher
in Nepal.

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Possible Support to Business Houses
Media as Watchdog
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Country is fully dependent on remittance received
from the Nepalese in foreign countries. The
remittance flow will be affected badly for next one
year after the revival of economy.
Impact will be there in labour market as huge
number of people are moving from Nepal to India
and India to Nepal.
Impact is there in education system.
Employment is affected in Tourism related business
and airlines industry.
Majority of the respondents feel that if businesses is
affected by coronavirus then Nepal government
should provide the disaster relief funds to the
business houses. Although whole losses cannot be
compensated but at least bank interest, electricity
expense etc need to be provided.
Airlines Industry and Hotel Industry running in
Nepal should be given Emergency assistance by the
Nepalese government. They are the major Industries
which will be hit by the Corona as compare to other
industries.
In Nepal print media and online news portal, have
been playing important role as watchdog in this
global outbreak.
The media is always writing failure of Nepal
government in preparedness and giving alert to the
responsible bodies.
Government started taking action to those people
who are spreading wrong information and rumours
on social media.
Although Nepal is experienced in dealing the Natural Disaster which has been learned recently
from 2015 Gorkha Earthquake but dealing with outbreak of corona virus is almost nil. There
is no such preparedness, response and recovery plan, however Nepal government is trying its
best to control the situation. The situation is worst to the family of people working directly or
indirectly into airlines, hotel and restaurant industries in Nepal especially in tourism sectors.
Some business revivals and staff supportive plans are required. Due to non-availability of
guests, such businesses are closing down. Not only tourism industry, but even the other
companies like manufacturing, retails, and automobiles in Nepal may have to lay off employees
as they will face liquidity problems and sales figures will be drastically down. Airlines Industry
and Hotel Industry running in Nepal should be given Emergency assistance by the Nepalese
government. They are the major Industries which will be hit by the Corona as compare to other
industries. Majority of the respondents feel that if businesses is affected by coronavirus then
Nepal government should provide the disaster relief funds to the business houses. Although
whole losses cannot be compensated but at least bank interest, electricity expense etc need to
be provided.

The recent steps taken by the telecommunication companies in Nepal in flowing the message
of washing hands with soap or sanitizer is more effective. Whenever you call to anyone, the
message that you heard in the mobile and landline phone is more effective. Even the text
message is received about the importance of washing hands in this global outbreaks. Indian
Prime Minister Narendra Modi proposed emergency fund based on voluntary contributions
from all SAARC members. This can be the small but good step taken by the SAARC nations
towards the control.

Conclusion

Expert analysis shows that there is direct impact of Novel Corona Virus outbreaks on Nepalese
Economy as Nepal is fully dependent on other countries and imports. The economic and social
isolation cost will be higher. Country substantially dependent on remittance flow so impact
will be seen till next 5 years. Labour Market and Education system have also been affected.
Unemployment will be higher in tourism related industry in days to come. This is true that just
calculating the impact on tourist trips, hotels, declines in retail trade, decline in remittance,
close down of education centre are not enough to get the real picture of impact on economy in
Nepal. There are some linkages in economy across various sectors both direct and indirect

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impact need to be calculated as economic shock of one nation will be directly linked to other
nation in this global world. The impact illustrated through the qualitative data is far greater
than the cost to a health budget of treatment of the cases involved. The more persistent shock
is Corona lasting for longer than anyone hopes in this increased globalization. There is need
of global monitoring and coordination mechanisms in containing both economic and microbial
epidemics as the impact is higher than expected.

Further study is required understanding the impact on each economic indicators in Nepal.

References:

Ahearne, A and N Shinada, (2005). Zombie firms and economic stagnation in

Japan. International Economics and Economic Policy 2, 363-381.

Bertin A L, T F Bresnahan and D M G Raff (1996). Localized competition and the aggregation
of plant-level increasing returns: Blast Furnaces, 1929-1935. Journal of Political Economy 104,
241-266.

Khan, N. and Naushad, M. (2020). Effects of Corona Virus on the World Community Available
at SSRN: https://ssrn.com/abstract=3532001 or http://dx.doi.org/10.2139/ssrn.3532001

Knobler S, Mahmoud A, Lemon S, et al (2004). Learning from SARS: Preparing for the Next
Disease Outbreak: Workshop Summary. Institute of Medicine (US) Forum on Microbial
Threats

Lamb, L. E., Bartolone, S. N., Ward, E. and Chancellor, M. B. (2020). Rapid Detection of
Novel Coronavirus (COVID19) by Reverse Transcription-Loop-Mediated Isothermal
Amplification” Available at SSRN: https://ssrn.com/abstract=3539654

NY Times (2020). SARS Stung the Global Economy. The Coronavirus Is a Greater Menace.
Available at: https://www.nytimes.com/2020/02/03/business/economy/SARS-coronavirus-
economic-impact-china.html

Electronic copy available at: https://ssrn.com/abstract=3560638

WHO (2020). Corona Virus available at: https://www.who.int/health-topics/coronavirus

Electronic copy available at: https://ssrn.com/abstract=3560638