April 25, 2015, Nepal government declared Emergency State due to earthquake that occurred followed by more than 150 aftershocks on average of 5 magnitudes for the few weeks. It is expected to bring the shortage of food, goods, labour crisis in Nepal. However this will have lesser effect on world market. In recent years, the social and economic cost of natural disaster is increased due to growth in population, migration, environmental degradation and unplanned urbanization. This leads to major destruction of economic and social infrastructure. This cause diversion of government funds for recovery and reconstruction Wisner et al. (2007). Due to the geographic circumstances of Nepal, it may have high exposure to investments. In spite of humanitarian assistance and responses from national and international community, the effect is expected to be much higher than expected large number of small hazard events, assets, gold, silver, valuable items don’t get registered but it will force the general people to poverty. Catastrophic will have a large negative economic impact on the country but a lesser effect on world markets as the contribution of Nepal in the world is negligible. All the disaster impacts the country’s economy directly or indirectly. Both Haiti and Japan experienced the devastating status of human suffering and loss of life however economic impact will be higher if it takes too many years to bounce back to its effects.
According to the geological survey from US, the economic losses estimated to be not more than $ 10 billion and cost to rebuilding is expected to be $5billion. If the economic cost touch to 10 billion then it would be higher than 2004 tsunami that ravaged Indonesia killing 230,000 people or 2010 Haiti earthquake inflicting $8 billion damage (Wall Street Journal, 2012).
Table 1: Death Tolls due to earthquake in Nepal
Death Toll (numbers)
Far Western Region
Source: Nepal Police: Available from: www.nepalpolice.gov.np
The table 1 shows that the more than 7 thousand people have died and more than 14 thousand people are injured. The search operation is still going on so the expected number of death and injuries may increase (Nepal Police, 2015).
Table 2: Infrastructure Damages due to earthquake in Nepal
Destroy of Physical Infrastructure
No of Units
Houses Completely Destroyed
Houses Partially Damaged
Temples / Schools Completely Destroyed (Including Government properties)
Temples / Schools Partially Damaged
Source: Nepal Police: Available from: www.nepalpolice.gov.np
The table 2 shows that more than 370,580 houses and infrastructures are completely and partially destroyed, which needs to be constructed immediately. This shows that there is more opportunities in Infrastructure related business and labour. ADB has projected the moderate inflation of 7.7% for this 2015. Due to supply side constraints and demand side higher after the earthquake is expected to be two digits. The price will severely increase for construction materials, labour, food, grains and vegetables (Sapkota, 2015). This shows that the developmental priorities of international donor agencies and Nepalese government need to be changed immediately.
Table 3: Most Affected Districts (Source: Nepal Police)
The growth rate in Nepal is already slower as compare to other South Asian neighbours. The growth rate of 4.6% is expected to decrease further down. It is expected that the GDP growth for coming days may increase due to faster reconstruction activities. The remittance from the Nepalese working abroad is expected to increase dramatically (Time, 2015). However there should be tight policy of 0 percent tolerance for corruption. As per Transparency International, Nepal is ranked as 126 nations out of 175 nations for corruption.
Nepal is ranked as one of the poorest nation in Asia with unemployment rate of over 40 percent having the per capita GDP of less than $1,000. Due to the earthquake, 31 districts have got major damages and human losses that need immediate attention from national and international supporting bodies. The service sectors and manufacturing business has also hampered. Hotel business, manufacturing business are evacuated and closed down for structural analysis. Every year natural disasters of droughts, fires, heavy rainfall, landslides are affecting the large number of rural households in Nepal. Rural area consists of majority of poor population and such calamities severely damage their crops, buildings, livestock and machineries. These consequences forced them to sell those available stocks in the name of reconstructions and repayments.
Although earthquake has a direct impact on GDP, prices and wages, Nepalese Government should focus on immediate responses and reconstruction as it will have a long term impact in economy. Similarly everyone should work together to create this as a opportunity for reforms in order to minimize the long term impact on economy. Government and responsible national and international bodies should focus on measures to protect buildings again effects of earthquake for future. As per United Nations Development Programme, Helen Clark, Nepalese need to build strong enforcement for building codes and increase the sense of awareness and preparedness to avoid catastrophe in future.
It is recommended for further analysis on this impact of earthquake on economy to get the real impact for minimum 2 to 3 years. Analysis of its economic impact just within 2 weeks of happening of earthquake may not give the adequate information and direction of the study.
Armenian H. K., Melkonian A. K., Hovanesian A. P. (1998) Long-Term Mortality and Morbidity Related to Degree of Damage Following the Earthquake in Armenia, American Journal of Epidemiology
Kahn, Matthew E. (2005), The Death Toll from Natural Disasters: The Role of Income, Geography,and Institutions, The Review of Economics and Statistics 87(2): 271–284.
Philippine NEDA (No date) Economic Impact of Disasters, Manila: National Economic Development Authority
Sapkota C. ( 2015) ADB’s initial analysis of the economic impact of the Nepal Earthquake, Available at: http://blogs.adb.org/blog/adb-s-initial-analysis-economic-impact-nepal-earthquake
Time (2015) Nepal’s Economy Will Take Years to Recover From the Deadly Earthquake, Available at: http://time.com/3837817/nepal-earthquake-economic-business-financial-impact/
Wisner B., Blajkie P. and Cannon T. (2003), At Risk: Natural Hazards, People’s Vulnerability and Disasters, Routledge; 2nd edition
18 Dec 2017 | News Release
ADB, Nepal Government Hand Over Reconstructed Earthquake-Resistant School to CommunityADB and the Government of Nepal handed over the newly reconstructed Shree Kali Devi Primary School in Kavre District to the community at a ceremony today.
11 Jul 2017 | Project Result / Case Study
Building Schools Better in NepalMore than 150 retrofitted school buildings withstood the earthquake that rocked Nepal in 2015. Now hundreds more schools are being upgraded to keep students and communities safe.
25 Nov 2016 | News Release
ADB, Nepal Kick Off Reconstruction of Earthquake-Hit Government BuildingsRam Prasad Thapaliya, Joint Secretary at Nepal's NRA, and Kenichi Yokoyama, ADB Nepal Resident Mission Country Director, today laid the foundation for the reconstruction of government buildings in Dhading under EEAP.
03 Oct 2016 | News Release
ADB, Nepal Government Launch Reconstruction of Earthquake-Hit SchoolsKavre, Mahadevsthan – Honorable Minister of Education D. R. Poudel and the Country Director of the Asian Development Bank’s (ADB) Nepal Resident Mission, Kenichi Yokoyama today laid the foundation for the reconstruction of Shree Kali Devi Primary School in Kavre District.
27 Sep 2016 | Infographic
Recent Significant Disasters in the Asia and Pacific RegionThe recent disasters that affected Nepal and the Philippines serve as a call to risk-prone countries throughout Asia and the Pacific to build and vigilantly maintain resilience to catastrophes.
25 Feb 2016 | News Release
Faster Public Investment Crucial for Nepal’s Recovery - ADB PresidentADB President Takehiko Nakao today met with Nepal’s Prime Minister Khadga Prasad Oli and Finance Minister Bishnu Prasad Paudel to discuss Nepal’s economic recovery and social development after the earthquakes in 2015.
08 Oct 2015 | News Release
ADB Approves Japan-Funded Grant to Rebuild Nepal Schools, LivelihoodsADB today approved a new $15 million grant to rebuild schools, provide microloans to help restore livelihoods, and to boost awareness of disasters in the 14 districts most severely affected by the recent earthquakes in Nepal.
04 Sep 2015 | Video
Solid Foundations for Nepal's Schools in Earthquake-prone RegionFor the children of rural Nepal, the prospect of studying in an earthquake resilient school is the dream of a new beginning after the 25 April 2015 earthquake that devastated the country.
11 Aug 2015 | News Release
ADB Provides Budget Support Loan to Nepal After EarthquakesADB has approved the release of a loan of about $27.5 million equivalent which Nepal will use for budget support as the country recovers from the devastating earthquakes in April and May 2015.
25 Jun 2015 | News Release