Impact of COVID-19 in Nepalese economy

Coronavirus disease (COVID-19) is an emerging global health concern which is caused by

severe acute respiratory syndrome coronavirus (SARS-COV-2). It is considered as the greatest
challenges for human beings after the Second World War. It was firstly identified in Wuhan,
China in December 2019 that spread globally and created a health crisis resulting in the
pandemic situation of the current context. The Covid-19 is affecting around 219 countries which
emerge the situation of a social, economic and political crisis that will leave deep scars on the
affected countries.

Nepal is suffering from the outbreak of coronavirus and 57 cases have been identified until 30
April 2020. The lockdown was initiated in Nepal from 24 th March 2020 to avoid and tackle the
critical health crisis due to the effects of COVID-19. The International Monetary Fund (IMF)
declared the global recession which signifies the upcoming adverse effect on the economy that
can create a fatal situation for the country. Nepal will not remain immune from the pandemic’s
negative impact and repercussions on the economy of the country. The novel coronavirus has a
direct effect on the Nepalese economy as Nepal is fully dependent on other countries and
imports. Even before the crisis, the economy of Nepal has not been favourable and after covid-
19, the prolonging natures of lockdown will definitely exacerbate the weakened economy of the
country.

The effect of COVID-19 is evident on majorly three subjects-tourism sectors, remittance inflow
and international trade. It severely influences the lifestyle of working-class people and creates
the situation of supply shortages of pharmaceuticals and essential basic goods. In 2020, Nepal
had declared an ambitious campaign, Visit Nepal 2020, to generate revenue and transform the
economy through the promotion of tourism. However, the global pandemic occurs that leads to
the cancel the campaign of Visit Nepal 2020, which was expected to boost Nepal’s economy by
attracting 2 million foreign tourists in the country. Tourism is one of the prominent sources of
economy in Nepal, but the tourists will no longer travel for the upcoming period due to the risk
of health condition created by a coronavirus. In Nepal, the position is critical to the people
working into airlines, hotel and restaurant business especially in the tourism sector. The statistics
show that the especially the hotel industry is in peril condition due to the reduced flow of
tourists, restriction of entry of citizens, that emerges the condition of unemployment, insolvency
and bankruptcy.

The outbreak of coronavirus has threatened the inflow of remittance, which contributes
significantly to balance the economy of Nepal. The labour migrants contributed 26 per cent in
GDP as per the report of 2019 in the form of remittance. The crisis has already the situation for
Nepali migrants out of the work that makes an adverse effect on foreign employment. The
consequence of coronavirus on remittance is disastrous as within the period of two months,
remittance has contributed less than 1 per cent in the country’s economy. It will not only impact
foreign employment, but also liquidity in the financial market and international trade. The
COVID-19 has hit hard on the areas of production, consumption, manufacturing and investment,
which will likely have the repercussions on the trade sector of the country. Nepal is highly
dependent on India and if India decides to close the borders due to the risk of coronavirus, Nepal
has to endure a huge economic recession. Likewise, both the neighbouring countries India and
China have been in critical condition due to which Nepal has to import from third countries that
can make products more costly. The impact of COVID-19 is severe in Nepal that has crippled
the country’s economy in the long run.

Thus, the government of Nepal should prioritize for effective measures in order to control the
coronavirus in the country. The utilization of “SAARC Emergency Fund” must be effective to
overcome the upcoming consequences against the pandemic. It is equally necessary for the
government to work with the public sector, private sector and other stakeholders to handle the
critical economic condition in an efficient way.