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A devastating 7.8 magnitude earthquake struck the South Asian mountain nation of Nepal on Saturday, April 25th. The quake caused almost 25,000 casualties including over 7,500 deaths. The earthquake also triggered massive avalanches in the mountains including one on Mount Everest that killed 19 people. In addition to this tragic human trauma, Nepal will be adversely affected by the economic aftershocks of this disaster for years to come.
The economic cost of rebuilding after the earthquake could reach upwards of $10 billion, according to U.S. Geological Survey estimates. This cost is especially devastating when it is compared to the nation's GDP of only $20 billion. This means that Nepal must depend on foreign aid to rebuild its economy, and even then it will still be a long, arduous process. Rajiv Biswas, the chief economist for the Asia-Pacific region at U.S.-based consultancy IHS, when asked about this major issue said, “The only advantage they have is that the size of their economy is small relative to donors’ capacity.”
The industry that will pay the biggest economic price is the tourism industry. This industry accounts for 8% of the national economy and 7% of the national workforce. Last year alone, over 800,000 foreign tourists visited Nepal. Tourists are drawn to Nepal by the world-renowned climbing and scenery that accompanies the Himalayan Mountains, including Mount Everest, and the several historic landmarks throughout the nation. The earthquake, and the accompanying aftershocks, caused severe damage to four out of the seven UNESCO World Heritage Sites in the nation. Alok Bohara, head of the University of New Mexico’s Nepal Study Center said, “The damage to these cultural landmarks will have a significant economic impact.” In addition to the destruction of these landmarks, potential climbers are being deterred by the high number of casualties that occurred in the mountains as a result of the quake.
If there is a bright side to Nepal’s post-quake condition, it is that the farming industry, which employs 80% of the population and accounts for roughly one third of the national GDP escaped relatively unscathed. Kenichi Yokoyama, the Nepal director for the Asian Development Bank explains that, “Unless land is affected by landslides, or farmers are injured, the agriculture sector may not necessarily suffer major damage”.
Overall, this natural disaster has placed Nepal in a precarious economic state. However, with the influx of foreign aid that is pouring in and the nation's agricultural base still intact, the nation will have a good start on its long rebuilding process.
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