Nepal’s economy is running on fear
Summary
Nepal's economy faces a severe confidence crisis due to aggressive anti-corruption measures, political unrest, and delayed government spending, causing private investment to stall despite abundant liquidity and remittance inflows.
Key Points
- The Rastriya Swatantra Party's large electoral mandate promised economic transformation but has been followed by rising business uncertainty and fear of arrests.
- September 2025 protests caused significant psychological and economic damage, reducing investor confidence and slowing growth.
- Nepal's GDP growth fell short of targets, with key sectors like agriculture and construction underperforming despite ample liquidity in banks.
- Private investment is stalled due to fear and uncertainty amidst anti-corruption drives, while government capital expenditure is significantly delayed, weakening economic momentum.
