Three months after the September 8-9 youth-led protests and before the next scheduled elections on March 5, Nepal continues to be affected by the ongoing economic impacts of these events. The events were sparked by a temporary ban placed on social media by the previous government; however, the escalation of these protests was fueled by frustration with continued economic stagnation due to the effects of corruption, lack of action by elected officials, and a feeling of disconnect from the general public. The combined effect of the demonstrations hasd resulted in the deaths of 76 individuals, as well as destruction and damage to thousands of buildings, including the country's parliament.
Economists and industry experts warn that the protests have pushed the nation back economically. Kamal Gautam, a 40-year-old kitchen worker at the Hyatt Regency, lost his job when the hotel was looted and closed. “It’s been three months since my salary stopped, and I have no idea how to support my family,” he said. Cases like his highlight the immediate human impact of the unrest, with informal workers and young adults among the hardest hit.
According to preliminary estimates provided by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the estimated monetary loss stemming from the protests will exceed 278 million dollars, and approximately 15,000 people have lost their jobs. Foreign direct investment has decreased from nearly forty million dollars to fourteen million dollars (91% decline) since mid-August; the decrease in FDI is attributed to a lack of investor confidence in the country stemming from economic and political instability. The World Bank has previously reported that the country was suffering from severe workforce issues prior to protests; 82% of the workforce is classified as being in informal jobs, and approximately one in five individuals aged fifteen to twenty-four years old is considered to be unemployed.
The revised GDP growth forecast for Nepal's economy for 2025 now stands at only 2.1%, as opposed to its previous estimate of 5.1%. Additionally, the World Bank has updated its prediction regarding poverty in Nepal for 2025; the World Bank now estimates that approximately 6.6% of the country's population will be living below the poverty line in 2025. Major corporations, such as the Bhat-Bhateni supermarkets, Chaudhary Group, and Ncell have each reported major financial losses due to the protests. Economist Chandra Mani Adhikari noted, “Multinational companies are psychologically disturbed, even national entrepreneurs are in the position of wait and see. We assume that, even now, only half of the country’s economy is running.”
Tourism, a sector contributing about 6.6% to GDP, was heavily affected. Visitor numbers fell 18% year-on-year in September, and popular destinations like Pokhara saw hotels, including Hotel Sarowar, damaged or set ablaze. The Nepal Tourism Board estimates loss of over $20 million in the Tourism sector and by September, occupancy reduction was above 90%.
Nepal's Gross Domestic Economy (GDP) is comprised of around 33% through remittance deposits, which indicate that many Nepalis that reside outside of their home country continue to send funds back into Nepal to assist their families. For example, remittance deposits of over 2.0 billion Nepalese Rupees (₨) ($14 million USD) were made in the ninth and tenth months of 2020 alone and demonstrate the ongoing financial support that many Nepalis overseas offer. Nevertheless, for families like Gautam’s, daily life remains a struggle. “I can neither go back to the village nor can I live in this expensive city,” he said.
As it moves into its March elections, the economic resurgence of Nepal is expected to be challenging. There is continuing economic uncertainty, lack of investor confidence and workers who have been negatively impacted by recent political instability are struggling to find employment.