Nepal Economy Will Take Years to Rebuild after Earthquake

Nepal’s economy will undergo long-term recovery, stemming from a 7.8-magnitude earthquake that killed over 5,000 people. Nepal needs the help of nations and banks from around the world, and analysts predict economic contraction if the struggling nation does not receive the necessary support.

Nepal’s economy will undergo long-term recovery, stemming from a 7.8-magnitude earthquake that killed over 5,000 people. Nepal needs the help of nations and banks from around the world, and analysts predict economic contraction if the struggling nation does not receive the necessary support.

The Asian Development Bank contributed $3 million for short-term aid, including another $200 million for reconstruction projects, and the United Nations called for $415 million over the next three months. Nepal will also need to rely on income from overseas workers to rebuild the economy. Over 2.2 million Nepali citizens work around the world in such areas as service and construction throughout parts of the Middle East and Asia. The country receives a large share of its income from remittances, taking in $5.9 billion from overseas workers in 2014 alone.

Damage Assessment

Forecasters believe that roughly 20 percent of Nepal’s economy would need reconstruction, amounting to $5 billion in reconstruction efforts. Even though many analysts believe damage assessment is premature, the U.S. Geological Survey determines that the damage could cost anywhere from $1 to 10 billion. The government was never prepared to deal with such a crisis, and Nepal’s economy was already in a fragile state before the quake hit. Bloomberg notes that Nepal is one of the poorest countries in Asia, and the developing nation has yet to attract major foreign investment and infrastructure development.

The ADB mentions that the country would need to spend over four times the amount than current levels to boost widespread investment. Nepal also has a corruption issue that may turn away potential investors. According to Transparency International, Nepal ranks 126th out of 174 in terms of corruption. However, China and India are major investment and trading partners of Nepal, and surrounding countries will be instrumental in redevelopment.

Tourism Impact

Tourism accounts for 7.0 percent the nation’s jobs, and tourist income makes up 8.0 percent of the overall economy. Tourists visit Nepal to see some of world’s highest mountain peaks, most notably Mount Everest. The quake also destroyed a number of heritage sites, which attracted visitors from around the world. Certain areas depend more on cultural hubs, such as the Kathmandu Valley, which held some of the most vital cultural spots in the nation. Kathmandu is a major economic center of Nepal, making up a third of the country’s economy. Current visitors are leaving in droves, and governments around the world have issued travel warnings to potential tourists. Governments and travelers fear such factors as ongoing aftershocks, the spread of disease and a lack of infrastructure.