Coronavirus outbreak could shave off Nepal’s economy by $36.78 million

  • 15,880 jobs could be lost depending on how the virus evolves

Kathmandu, March 6

The novel coronavirus (COVID-19) outbreak will hit almost every sector of the Nepali economy, shaving up to 0.13 per cent off the gross domestic product and rendering up to 15,880 people jobless, as per an analysis by the Asian Development Bank.

The Manila-based multilateral lender has explored a range of scenarios on the economic impact of COVID-19 as the outbreak is still evolving, making it difficult to make rational predictions.

If the outbreak’s impact is minimum on Nepali economy, the country’s GDP will shrink by 0.04 per cent or $12.12 million, considering the size of Nepal’s economy as of 2018 at $29 billion. Similarly, Nepal’s GDP will shrink by 0.06 per cent or $18.35 million if the impact of the outbreak is moderate, as per ADB. However, ADB has stated that the COVID-19, in the worst case, could shave off up to 0.13 per cent or $36.78 million from the country’s economy.

“However, the magnitude of the economic impact will depend on how the outbreak evolves, which remains highly uncertain. The COVID-19 outbreak affect’s Asian economies through numerous channels, including sharp declines in domestic demand, lower tourism and business travel, trade and production linkages, supply disruptions, and health effects,” as per ADB.

ADB has stated that the COVID-19 will affect an array of sectors, including hotels and restaurants, manufacturing, construction, transport, trade and business, among others, in Nepal and the Asian region.

ADB forecasts that the virus will primarily affect the hotel and restaurant sector in Nepal. ADB has analysed that the COVID-19 can shrink Nepal’s hotel and restaurant sector by 0.03 per cent or $8 million to 0.08 per cent or $24.07 million, depending on how the outbreak evolves.

“Tourism arrivals and receipts in many developing Asian economies are expected to decline sharply as a result of numerous travel bans as well as precautionary behaviour,” states ADB.

With the coronavirus outbreak hitting almost every sector in Nepal, it can lead to cut down of 5,210 to 15,880 jobs in the country, depending on how the epidemic develops.

Meanwhile, the range of scenarios explored by ADB suggests a global impact of $77 billion to $347 billion or 0.1 per cent to 0.4 per cent of global GDP, with a moderate case estimate of $156 billion or 0.2 per cent of the global economy.

“There are many uncertainties about COVID-19, including its economic impact. This requires the use of multiple scenarios to provide a clearer picture of potential losses,” said ADB Chief Economist Yasuyuki Sawada.