COVID-19 pandemic: A set back to Nepali economy growth

Nepal once again has gone into the second spiral of lockdown in a bid to break the chain of surging the COVID-19 virus in the country. As the country has witnessed over 9000 daily coronavirus cases with over 4000 death tally, the government left with no option other than to impose strict prohibitory order in most parts of the country.

The COVID-19 pandemic and the resulting lockdown have slammed projected economic growth and pushing almost three in every five people working in small or micro-enterprises out of jobs. The global pandemic has hit Nepal’s tourism, entertainment, and transport sectors hard. Based on the UNDP annual report, the pandemic has hit both formal and informal small and medium-sized businesses hard, with 60% of workers in those enterprises reporting that they are now jobless, with average monthly incomes down 95 percent. Meanwhile, the World Bank has also warned that “the pandemic will hit hard low-income people, especially informal workers in the hospitality, retail trade, and transport sectors who have limited or no access to healthcare or social safety nets” and that the COVID -19 shock will likely reinforce inequality in South Asia. ”

The informal sector has received another blow just as it was heading towards recovery after the painful 2020 lockdown and movement restrictions, industrialists said, and if the stay-home order draws out, they will be forced to cut jobs on a massive scale.

The production is down by 50 percent on subdued demand and a labor shortage. In a report published by Nepal Rastra Bank on the impact of Covid-19 on the Nepali economy published by Nepal Rastra Bank in January, 54 percent of the manufacturers and businesses have resumed full operation. Industries that were operating at 28.77 percent of capacity had bounced back to 50.51 percent of capacity as of the date of the survey. Employment in the manufacturing sector has also improved from 77.50 percent to 87.51 percent. The central bank revealed that 96 percent of the factories were shuttered during the lockdown last year. The Covid-19 related lockdown and localized restrictions dragged the economy into negative territory, and it recorded negative growth of 1.99 percent in the last fiscal year.

The report of International Labor Organization had reported that between 1.6 to two million jobs were disrupted in Nepal due to the pandemic from last year, either with complete job loss or reduced working hours and wages. Approximately 5.7 million or 80.8% of workers in Nepal have informal jobs and they are the most at-risk workers together with around 1.4 million home-based workers, mostly women.

Private sectors are extremely worried by the present situation created by the COVID-19 pandemic. This will affect the economy further which was about to bounce back from the impacts spurred by the first wave of the virus. They have urged the government to give relief to the workers working in the informal sector who have lost their jobs due to the prohibitory orders through schemes like the PM Employment Program.

Experts, meanwhile, opined that the government, the private sector, and the public have a major responsibility to keep the economy afloat by containing the virus.