KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The developments highlight how escalating geopolitical tensions in the Middle East are creating wide-ranging economic and logistical challenges for Nepal and the broader region. Rising global oil prices, disruptions to air travel, and threats to the Strait of Hormuz are increasing uncertainty in energy and transport sectors, while the conflict also puts at risk nearly 41% of Nepal’s remittance inflows that originate from Middle Eastern countries—posing a potential threat to the country’s foreign exchange stability.
At the same time, fluctuations in global financial markets, including a stronger US dollar, have triggered sharp declines in domestic gold prices as investors shift toward safer assets and energy markets. Despite these external pressures, Nepal is attempting to maintain internal economic stability through measures such as reopening customs operations, regulating resource extraction, promoting tourism internationally, and supporting sectors like commercial agriculture.
Together, these trends reflect a fragile economic environment where global conflicts, energy markets, and currency movements are increasingly influencing Nepal’s economic outlook and development trajectory.
Gold prices fall sharply as US dollar strengthens
Gold prices in Nepal dropped by Rs 11,000 in a single day yesterday due to the strengthening of the US dollar. As the dollar reached a record high of INR 92, the Nepali rupee weakened, prompting investors worldwide to shift their assets from gold to dollars. In the domestic market, gold prices fell from Rs 328,600 to Rs 317,600. Kiran Bhai Bajracharya, Secretary General of the Federation of Nepal Gold and Silver Dealers’ Association, said that geopolitical tensions have also redirected investor interest toward crude oil, further reducing demand for gold in the local market.
Middle East war threatens 41% of Nepal’s remittance inflows
The intensifying conflict in the Middle East puts 41% of Nepal’s remittance earnings at risk, as these funds originate from 15 countries in the region. Remittances currently contribute about 25% to 27% of Nepal’s Gross Domestic Product. During the first six months of the ongoing fiscal year, remittance inflows reached Rs 10.629 billion. Nepal Rastra Bank Executive Director Ram Sharan Kharel stated that the country’s foreign exchange reserves can currently cover imports for 18.1 months, but a prolonged conflict would put significant pressure on the economy. Major destinations for Nepali workers include the UAE, hosting around 700,000 workers, and Saudi Arabia with about 384,865 workers.
Global oil prices climb 3%, likely to increase further
Crude oil prices rose by more than 3% in early trading on Thursday as concerns intensified over possible long-term supply disruptions. Brent crude increased by 3.26%, reaching USD 83.99 per barrel. The shutdown of the Strait of Hormuz—a crucial maritime route between Iran and Oman responsible for transporting around 20% of global oil consumption—has compelled countries to explore alternative shipping routes. While US President Donald Trump proposed providing naval escorts for oil tankers, Iran’s Revolutionary Guard asserted that it had taken full control of the strait. Such instability poses a serious risk for Nepal, which depends entirely on India for its fuel imports.
Middle East conflict halts flights to nine countries
International flights to nine countries have been suspended due to the escalating conflict in the Middle East, according to the Tribhuvan International Airport office. By Wednesday, at least 104 scheduled flights had been canceled, affecting nearly 17,000 passengers. Airport spokesperson Santush Kumar Basnet stated that airspace restrictions remain active in Qatar, the UAE, Kuwait, Iraq, and Israel. Although Fly Dubai attempted to resume services, airlines including Qatar Airways and Nepal Airlines canceled their flights. Affected passengers are permitted to reschedule or receive ticket refunds without penalties within 45 days after services resume.
Customs offices resume operations after 72-hour election shutdown
Customs offices across the country reopened at 6:00 PM today following a 72-hour shutdown implemented for the House of Representatives election. The closure, which started at midnight on March 2, restricted non-essential cross-border movement to maintain security during the polls. Director General Shyam Prasad Bhandari stated that only essential cargo, including medicine and fuel, was permitted to move during the election period. With the restrictions lifted, major customs points such as Birgunj have resumed processing private and commercial imports, ending the temporary halt that helped ensure peaceful voting at border areas.
Qatar Airways plans limited evacuation flights amid airspace crisis
After joint military strikes by Israel and the United States on Iran, Qatar Airways announced that it would begin operating limited relief flights from Thursday to assist stranded passengers. These flights will connect Muscat with European destinations such as London Heathrow, Rome, and Amsterdam, and also operate from Riyadh to Frankfurt. Nepal, however, has not been included in this initial rescue plan, leaving two wide-body aircraft stranded in Kathmandu since Saturday. Meanwhile, Fly Dubai resumed direct services to Kathmandu on Wednesday night. Regular Qatar Airways operations will remain suspended until authorities confirm that regional airspace is safe for commercial flights.
Govt orders halt to unauthorized gold exploration activities
On February 27, the Department of Mines and Geology instructed companies holding gold exploration licenses to immediately stop unauthorized operations. The directive followed reports from municipalities and media that some firms were diverting river flows using heavy machinery and employing foreign technicians without approval, in violation of their exploration permits. Under Section 11(a) of the Mines and Minerals Act, 1985, activities causing environmental damage are strictly prohibited. The department warned that failure to comply with the Mines and Minerals Rules, 1999, particularly regarding public interest and environmental protection, could lead to the immediate cancellation of exploration licenses.
Finance Commission warns against reducing grants to provinces and local units
The National Natural Resources and Fiscal Commission has cautioned the federal government against cutting equalization grants allocated to provincial and local governments. The Ministry of Finance recently proposed releasing only 20.43% of the third quarterly installment, citing revenue collection that has reached just 81.75% of the annual target. The commission argued that its fiscal transfer recommendations are constitutionally binding under Articles 60 and 251 of the Constitution of Nepal. For the current fiscal year, the federal government had earmarked Rs 417.825 billion for four categories of grants, representing 21.27% of the total national budget.
Nepal Tourism Board launches free shuttle service for air passengers
To assist travelers during the general election period, the Nepal Tourism Board introduced a complimentary shuttle bus service for airline passengers on Thursday. Operating from 5:00 AM to 7:00 PM, the buses connect Tribhuvan International Airport with major hotels and key areas of Kathmandu. Three routes cover destinations including Thamel, Boudha, and Patan. For example, bus BA 1 PA 1378 operates along the Kantipath route, while BA 1 PA 1320 serves Maharajgunj. Acting Director Sunil Sharma encouraged travelers to use these organized transport services to reach their destinations safely despite nationwide vehicle restrictions.
Private sector hopeful for economic rebound after elections
Nepal’s private sector has expressed strong optimism about the ongoing election, viewing it as a path toward political stability and economic reform. Following the Gen Z protests in September 2025 and the uncertainty that followed, business leaders believe a new government could restore investor confidence. Chandra Prasad Dhakal, President of the Federation of Nepalese Chambers of Commerce and Industry, said that although elections do not immediately solve economic problems, they provide the policy stability needed for long-term investment. Business leaders have urged the incoming government to focus on infrastructure development and export promotion to counter the combined effects of domestic unrest and global tensions.
Nepal showcases diverse tourism potential at ITB Berlin 2026
Nepal is participating in ITB Berlin, the world’s largest travel trade exhibition, from March 3 to March 5 to strengthen its position in the global tourism market. Robin Regmi, a senior officer at the Nepal Tourism Board, said the country is promoting itself not only as a trekking destination but also for wellness tourism, adventure sports, and cultural heritage experiences. The Nepal Pavilion, inaugurated by Acting Ambassador Sagar Phuyal, features 25 private tourism companies. Through the campaign “One Destination, Many Experiences,” Nepal is highlighting community-based homestays and spiritual tourism to attract new international partnerships.
Commercial coffee cultivation expands in Bhojpur
Farmers in Bhojpur district are increasingly shifting from traditional crops to commercial coffee farming due to better market opportunities. The federal government has allocated a special grant of Rs 33 million this fiscal year to support expansion in municipalities such as Ram Prasad Rai and Hatuwagadhi. Farmer Manoj Rai said that cooperative farming on 11,192.12 square meters of land has proven more profitable than maize or potatoes. According to trader Sunil Shrestha, the district’s organic coffee is supplied to markets in Kathmandu and exported abroad, significantly boosting local income and making coffee a key source of livelihood.
Nagdhunga–Sisnekhola tunnel project paused during elections
Work on the Nagdhunga–Sisnekhola tunnel project has been temporarily suspended from Tuesday to Saturday as workers returned to their home districts to participate in the election. Project Director Saujanya Nepal said the pause coincides with both the Holi festival and the House of Representatives polls. The project is now about 98% complete, including the 2,688-meter main tunnel and the 2,557-meter emergency tunnel. However, final landslide mitigation work in Dhading remains pending. Construction by the Japanese contractor Hazama Ando Corporation is expected to resume on Sunday once workers return.
India faces potential energy supply disruptions amid regional tensions
India’s largest liquefied natural gas importer, Petronet LNG, has warned that escalating tensions in the Middle East could disrupt its operations because vessels cannot safely reach Qatar Energy’s Ras Laffan port via the Strait of Hormuz. As a result, the company issued a force majeure notice to Qatar Energy and domestic clients such as Indian Oil Corporation. Although India currently has crude oil reserves for about 25 days and LNG stocks for three weeks, analysts say rising energy costs could place additional pressure on South Asian economies. Experts also warn that Sri Lanka and India are particularly vulnerable due to their heavy reliance on imports.
Crude oil prices predicted to exceed $100 per barrel
Kirill Dmitriev, CEO of the Russian Direct Investment Fund and special envoy to the Russian president, said on Thursday that global crude oil prices are likely to surpass USD 100 per barrel. Rising tensions in the Middle East, triggered by widespread military strikes by the United States and Israel on Iran starting February 28, have disrupted global energy markets. Following the deaths of Ayatollah Ali Khamenei and several senior leaders, Iran has launched retaliatory attacks against US military bases in Bahrain, Jordan, Qatar, and Saudi Arabia. As a result, Murban crude prices have already climbed to USD 96.
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