Introduction

COVID-19 the first case was identified in Wuhan, China in December 2019. The disease had since spread worldwide, leading to an ongoing pandemic. The World has been gripped by a pandemic over the first half of 2020. It was identified as a new coronavirus ( and later named as Coronavirus Disease-19 or COVID-19. 

While COVID-19 originated in the city of Wuhan, it has spread rapidly across the world, resulting in a human tragedy and tremendous economic damage. The coronavirus disease (COVID-19) has critically impacted global health systems and economies, especially in developing countries. Those countries had been struggling to address the pre-existing burden of diseases with limited resources, which will become even more challenging during COVID-19. The economic implications related to COVID19 in those countries include a high cost of care, market failures in pluralistic health systems, high out-of-pocket expenses, the added burden of non-communicable diseases, missed economic opportunities, and socioeconomic consequences like unemployment and poverty . 

Undeniably, the COVID-19 pandemic is taking an unprecedented toll on the global economy along with public health and livelihood issues. Magnitude of the economic losses will depend on how the outbreak evolves as any pandemic diseases and its economic consequences are vastly ambiguous which makes it challenging for policymakers to work out an axiomatic and appropriate macroeconomic policy.The COVID-19 pandemic is resulting in a major global recession even today.

Impact of Covid-19 in the economy of Nepal

The COVID-19 has already affected whole countries and regions in the world. Economically developed countries had failed to tackle this pandemic situation. In comparing developed countries, the developing and poor countries were unable to meet this condition. 

Nepal is a least developed country and used isolation and lockdown to stop the spread of this deadly virus. Due to lockdown and isolation, the economy of Nepal was seriously affected. Nepal imposed a lockdown to control the spread of the coronavirus on 24 March 2020 and partially opened it in the first week of September 2020. The lockdown had affected the overall physical, mental, social and spiritual health of the people and posed unique challenges with vulnerable populations and limited resources to respond to the pandemic. 

Agriculture sector is a major sector of the economy in terms of income, employment and food security in Nepal. The agricultural crops, livestock and fisheries were not outside the impact of COVID-19. Being an agricultural country, the travel restriction and lockdown had affected every stage of the food supply chain, including food production and distribution in Nepal. Farmers were compelled to dump milk and vegetables after a significant decrease in supply and closure of processing companies and proper markets. The implementation of lockdown had affected all sectors in the country including agriculture. The disruption of the agricultural inputs supply had caused shortages of seeds, fertilizers, veterinary medicines, and feed for animals. The loss of jobs and incomes as a result of the lockdown has pushed the vulnerable population into further food and nutritional insecurity.  

Remittance is the life-blood of many developing countries in the world like Nepal. The country is embraced with a huge population, but this population is an asset for the country because they are well known as remittance fighters and worked in different parts of the world. Remittances have become a major contributing factor to increasing household income as well as country's GDP. About 30 percent of Nepal's GDP comes in the form of remittance money which is sent home by Nepalese working abroad and it helps to reduce the country's poverty rate. 

The COVID-19 pandemic outbreak from January 2020 onwards has seemingly changed many parameters in the world economy, society, politics, and culture. The remittance sending behavior, trends, volumes are changed. Remittance income will be severely affected due to COVID-19 pandemic. The income fell by 0.2% y/y in mid-February 2020 after rising by 16.0% in the year earlier period. Remittance income, about 8$ billion per fiscal year, or 26% of GDP, is one of the major sources of foreign earnings. 

In Nepal the first lockdown had started from 24th March 2020 to 21st July, 2020. More than 800,000 migrant workers had returned home from places such as the Middle East and India (Mercy Corps). This significant homecoming trend resulted in the flow of remittance tremendously decreasing in the years hardly hit by the covid pandemic. The foreign remittance had come down and thus had hit the foreign reserves of the country. 

The foreign trade sector had also been impacted severely due to the pandemic. The country had experienced rapid economic growth mainly driven by exports of cardamom, jute goods, polyester yarn and threads, noodles and pashmina. The country has been and is still largely dependent on imported products from neighboring countries. After the outbreak of Covid-19, the import and export-oriented companies were also at risk. Business people feared the country's imports and exports would further decrease in the coming days because of how badly the covid-19 had hit families. People lost their jobs, were bed-ridden and at the same time the financial instability hit each one of us consequently declaring everything else a luxury apart from the basic food and shelter for survival. Consequently, the consumption as well as production of goods plummeted down and the economy was at a halt. 

Apart from these sectors,the impact analysis matrix of the UNDP states that the accommodation and food; arts, entertainment and recreation; and transport and storage were the other most affected sectors. The severity of the impact on tourism, which includes accommodation and food, and transport is compounded by the external shocks emanating from global factors that determine the number of tourist inflows. 

Travel, gatherings, and eating out had been limited. These sectors were affected much before the lockdown and the impact was expected to persist given that the recovery in these sectors is going to be slow and difficult. Hence the livelihoods of the large number of people who were employed in these sectors were directly at risk. These three sectors together account for 7-10 percent of GDP and provide employment to 8-12 percent of the total employed population. Tourism is the fourth largest source of foreign exchange reserves and its diminution has adversely impacted the balance of payments. 

Manufacturing; construction; wholesale and retail trade; repairs of motor vehicles and motorcycles; and agriculture, forestry and fishing are the four sectors that were moderately affected by the pandemic. These four sectors were subject to supply shocks due to disruption in either external or internal supply chains. Most inputs to manufacturing, construction and furnishing materials for construction and tradable goods are imported and hence the disruption in the global supply chain had a direct impact on these sectors. 

Conclusion

Economic recovery depends on various factors, including government policies, vaccination rates, global economic conditions, and the resilience of different sectors. Governments often implement fiscal and monetary measures to stimulate economic activity, such as infrastructure spending, tax incentives, and low-interest rates.

In the case of Nepal, the government's response to the pandemic and its ability to manage the economic fallout have played a role in the recovery process. The country had focused on reviving key sectors like tourism, remittances, and agriculture, which are significant contributors to Nepal's economy. International support and collaboration, including financial aid and assistance in vaccine distribution, has also influenced the pace of recovery. Improved vaccination rates and successful containment of the virus had proven to boost consumer confidence and support a return to normal economic activities.