Nepal faces economic crisis of September protest

Nepal is grappling with severe economic fallout three months after the youth-led protests in early September that toppled the government and triggered some of the worst unrest the country has seen in years. 

The two-day upheaval on September 8–9 — sparked initially by anger over a short-lived social media ban but fuelled by wider frustration over unemployment, inflation and entrenched corruption — killed 76 people and caused extensive damage to state institutions, including partial destruction of parliament.
What began as a Gen Z-driven mobilisation against the political establishment quickly morphed into nationwide riots after police cracked down, leading to more than 2,700 buildings being damaged, looted or set ablaze. The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) estimates economic losses surpassing $278 million, with almost 15,000 people left jobless as businesses shuttered or scaled back operations.
Foreign direct investment, already weak before the crisis, has collapsed. Government data shows that FDI commitments fell 91 percent to just $14 million in the three months following mid-August — a dangerous setback for an economy heavily reliant on external capital. Investors have adopted a wait-and-see approach ahead of the March 5 elections, citing political instability and uncertainty over regulatory continuity.
Even before the turmoil, Nepal was struggling. The World Bank reported that 82 percent of the workforce was engaged in informal labour, with one in five young Nepalis aged 15–24 unemployed. In its November update, the bank downgraded Nepal’s GDP growth projection for 2025 to 2.1 percent, sharply lower than its earlier estimate of 5.1 percent, citing the impact of the riots and worsening economic sentiment.
Major corporate players — including retail giant Bhat-Bhateni, the Chaudhary Group conglomerate and telecom operator Ncell — reported significant financial losses, further straining government revenue. Tourism, one of Nepal’s key economic pillars and contributor of 6.6 percent to GDP, saw an 18 percent year-on-year drop in arrivals in September, dealing another blow to local businesses.
One bright spot has been remittances, which surged past 200 billion Nepali rupees ($1.4 billion) between mid-September and mid-October — the highest monthly inflow on record. However, analysts caution that reliance on migrant earnings underscores the structural weaknesses in Nepal’s domestic job market.
With elections looming and economic recovery uncertain, experts warn that Nepal’s path to stability will depend on restoring investor confidence, rebuilding damaged infrastructure and addressing long-standing grievances that fuelled the unrest.