Image 1: A silent tribute to the lost martyrs of Gen-Z protest that took place on September 8th and 9th of 2025 in Nepal, with words reading “Long Live Martyrs” during the mourning day of the martyrs.
Arun Sankar/AFP via Getty Images
The Gen-Z protests that took place on 8th and 9th September 2025 marked a major shift in Nepal’s political scenario. Within 48 hours, the protesters clashed with the government, leading to 72 deaths, at least 2,113 injuries, and toppling the government, forcing the resignation of former Prime Minister K.P. Oli. Shortly, the parliament was dissolved by President Ram Chandra Poudel on 12th September 2025 as one of the demand criteria of the Gen-Z protests. The new general election date for the election of the House of Representatives has been scheduled on 21st Falgun 2082, or 5 March 2026.
While the political scenario has shifted, with elections coming up 2 years earlier than scheduled, the economic landscape has also taken a turn.
The Economic Offset
Image 2: A collage of multiple institutions, businesses, and the parliament of Nepal, representing the arson and damage of protests.
Extensive damage was inflicted throughout the two days of protests, with major infrastructures, businesses, and public services throughout the country being affected. The Nepal Rastra Bank has estimated a total collateral damage of 3 trillion Nepalese Rupees (NPR), which converts to roughly USD$21 billion, or nearly half of Nepal’s GDP.
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has estimated a loss of nearly NPR. 80 billion, or USD$565 million in damages due to the protests encompassing property destruction, business disruptions, and loss in productivity.
Financial Institutions, including banks like Rastra Banijya Bank, Himalayan Bank, among others, and ATMs were looted and robbed due to exploitation of the chaos. In total, the gold and cash lootings from various branches totaled over NPR. 380 million, alongside vandalism and arson done at 68 bank branches and 69 ATMs throughout Nepal. Educational Institutions also faced arson attacks, including Ullens School, Global College, and Nami College, disrupting the education of more than 10,000 students, jobs of hundreds of teachers and facilitators, causing massive damages valued at over NPR. 1.25 billion for Ullens alone.
Due to the political instability and uncertainty of the situation, tourism, a sector contributing nearly 8% of Nepal’s GDP, was significantly affected. The Hotel and Tourism sector suffered a 40% drop in tourist arrivals and trip bookings due to safety concerns and the unstable political scenario. Foreign embassies advised their citizens to avoid traveling to Nepal during the time period. Economists estimate around NPR 25 billion in losses due to damaged infrastructure, hotels, and a drop in tourism during the time period caused by the protests.
What does it mean?
For common Nepalis, an economic hardship is clearly foreseeable in the coming future. This could be a result of various important economic factors, like increased unemployment, reduced business investments, halted projects, among others, caused due to the protest and the political instability of Nepal.
The Problem of Unemployment
Firstly, the protests have led to a significant decline in tourism throughout September and October, resulting in losses of over USD$177 million. Additionally, many small shops, big supermarkets, hotels, schools, and colleges, and several malls were damaged and looted. An estimated 10,000 jobs were lost overnight due to business closures and damage. Additionally, due to the government’s new strategy to conserve economic capital, the budget was reallocated, and the majority of government hires were suspended.
Nepal already has one of the highest youth unemployment rates in South Asia, totaling 20.5% according to the latest data of 2024 presented by the World Bank.
Image 3: Youth Unemployment rate (%), ages 15-24, chart by the World Bank
The World Bank has also highlighted that such an instability could worsen the youth unemployment, which is already at a very high rate, leading to heightened cyclical unemployment.
Why are the investors scared?
Investor’s confidence refers to the willingness among investors to invest in assets, stocks, bonds, or real estate, based on their expectations of future returns. Due to the arson attacks and vandalism at major businesses, and the uncertain political as well as economic landscape, Investors’ and Business confidence has eroded significantly.
Former president of Nepal Chamber of Commerce and Industry (FNCCI) Rajendra Malla highlighted that the unrest has created an atmosphere of fear across the business community. This fear among the business and investors’ community could directly lead to reduced foreign direct investments (FDIs), due to cases like the Hilton Hotel and Ullens School, and delay major ongoing projects in the economy.
The government’s failure to safeguard businesses and projects has led to a loss of investors’ confidence, which can directly threaten the long-term growth of our economy, and a possibility to cause increased unemployment as job opportunities are reduced.
Major Credit Rating Companies have noted the recent turbulence. “Calm has returned, but we believe the violence has dampened near-term growth prospects by curbing normal economic activity and hurting consumer and business confidence,” Fitch said. This has created a “wait-and-see” attitude among international investors and stakeholders, presumably recommending pausing immediate investments until the situation improves.
The World Bank estimates a GDP loss of 5%, revising Nepal’s GDP growth forecast for the fiscal year 2025/26 to be reduced to 2.1% from 5.2%. If the political and economic instability persists, with higher unemployment rates and lower business revenues, the World Bank has warned of a possible contraction in the GDP in the negative, up to -2.6%.
A trend line chart of Nepal’s GDP Growth Forecast (%) for fiscal year 2025/26, charted using The World Bank’s latest data, and future predictions due to post-protest loss and damages.
Additionally, the government also faces a huge fiscal burden. The majority of government buildings and infrastructures, even at the local level, such as ward offices, have been damaged. A huge amount of capital is required to repair the damage and resume the government procedures. In addition, the new elections have been scheduled two years early from the original 2027 schedule to March 5, 2026, responding to the demands of Gen-Z protesters. For comparison, Nepal spent NPR 7.80 billion for the first House of Representatives and provincial assembly elections in 2017 and NPR 6.55 billion in the 2022 elections. It is assumed to say that a higher amount, possibly between NPR 7 billion and NPR 10 billion, is required to cover increased voter registrations, logistics, tighten security, and maintain fair and free voting procedures.
Nepal’s Path Forward
It is crucial for the government, especially the Ministry of Finance and Nepal Rastra Bank, to study in-depth from lessons of post-protests crises and their impact on the economy from Sri Lanka and Bangladesh, among others. It is also vital for providing financial security to businesses and investors, with the possibility of implementing tax breaks/reduced taxes, low-interest loans, and easing monetary policy to control inflation while boosting investments. It is absolutely important for the interim government to also look into the high unemployment of youths, currently at a staggering 20.5%, and introduce possible measures to increase job opportunities.
Lastly, the March 2026 elections can partly determine the result of the recent revolution. Ensuring the elections proceed on schedule and with a fair and free voting practice is important to stabilize our current political scenario.
🖋️ Kavya Khatiwada