Nepal Development Update, July 2020 : Post-Pandemic Nepal – Charting a Resilient Recovery and Future Growth Directions
The global COVID-19 (Coronavirus) pandemic imposed both a supply and a demand shock on Nepal’s economy, which adversely affected growth. The global crisis induced by the pandemic initially impacted Nepal through the tourism sector, with arrivals fr...
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/473551595429740654/Nepal-Development-Update-Post-Pandemic-Nepal-Charting-a-Resilient-Recovery-and-Future-Growth-Directions http://hdl.handle.net/10986/34178 |
| Summary: | The global COVID-19 (Coronavirus)
pandemic imposed both a supply and a demand shock on Nepal’s
economy, which adversely affected growth. The global crisis
induced by the pandemic initially impacted Nepal through the
tourism sector, with arrivals from China dropping by around
70 percent in February and a full stop to the issuance of
visitor visas taking effect in early March 2020, which has
effectively dropped tourist arrivals to zero. The impacts of
the pandemic did not remain limited to tourism. On March 21,
the Government of Nepal announced a nationwide lockdown,
which affected industrial and agricultural production,
leading, for instance, to more than a 25 percentage point
decline in capacity utilization of industry by early June
2020 and a 64.7 percent (y/y) drop in credit provision to
the private sector during the two-month lockdown period.
Demand for consumption and production products, such as
diesel and petrol, slowed, with many Nepalese experiencing
job losses or the inability to outmigrate due to widespread
travel restrictions. A domestic outbreak of COVID-19
commenced in May, prolonging the lockdown and imposing
substantial human and further economic costs. As a result of
the impact of COVID-19, GDP growth in Nepal is estimated at
1.8 percent in FY2020, compared to 7 percent in FY2019.
Growth in the service sector is now estimated at 1 percent,
the lowest since FY2002, while growth in the industrial
sector is estimated at 3.2 percent, a four-year low, due to
the deceleration in overall growth. |
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