Hit by Covid-19 curbs, Nepal's economy contracts for first time in decades

Nepal had shut down virtually all economic activity for nearly four months last year.
Nepal had shut down virtually all economic activity for nearly four months last year.PHOTO: AFP

KATHMANDU (REUTERS) - Nepal's economy contracted for the first time in four decades in the last fiscal year due to a months-long lockdown to contain the Covid-19 pandemic, officials said on Friday (March 5).

Nepal, wedged between China and India, ordered a strict lockdown in March last year, completely shutting down virtually all economic activity for nearly four months to curb the spread of the coronavirus.

Mr Ishwari Prasad Bhandari, a senior official of the government's Central Bureau of Statistics (CBS) said Nepal's GDP shrank by 1.99 per cent in the year ending July 15. It grew by 6.75 per cent in the previous year.

"This is the first time since 1979-80 that the economy has recorded a minus growth rate," he told Reuters, adding that the coronavirus outbreak had hit all sectors.

The government began to partially ease coronavirus containment measures in July, but many sectors like tourism, hotels, transport and theatres remained under curbs for longer. Nepal began its vaccination campaign with AstraZeneca shots gifted by India in January. Infections are decreasing, with 107 new cases reported on Thursday - a fraction of the peak hit in October.

The Himalayan nation has reported 274,488 cases and 3,010 deaths so far, according to official data. Nepal closed all its peaks to climbers during the high season last year due to the pandemic, badly hitting its tourism-dependent economy.

Mr Pushpa Raj Kadel, vice-chairman of the government's National Planning Commission, said while tourism and education were yet to fully resume, growth as a whole would rebound this fiscal year.