The clothes Ashok Kumar Chaurasiya wore as he fled his textile shop in Nepal’s Trishuli Bazaar last week were almost all he has left after the floods. The 62-year-old trader, who moved from India to Nepal about four decades ago, had built six shops and stocked up ahead of the festival season. Last Wednesday, with only minutes between the warning and the water reaching the settlement, Chaurasiya, his son and mother raced to higher ground on a motorcycle.
The flash floods destroyed his shops and merchandise valued at 45 million Nepali rupees ($296,000), none of it insured. The catastrophe struck just ahead of Nepal’s crucial September-to-November Hindu festival season, when celebrations including Dashain and Tihar typically drive a surge in spending. Like Chaurasiya, many traders had stocked up in anticipation, only to have inventory destroyed or stranded while bank loans and supplier bills remain due.
Jayant Kumar Agrawal, secretary-general of the Nepal Foreign Trade Association, estimates at least 1,000 importers were affected by the floods. Replacing goods will be more expensive because of disrupted trade routes, while some insured businesses may struggle to prove their losses after customs agents’ offices and records were swept away. Beyond the areas directly hit, businesses also face the prospect of weaker festival spending as the country reels from a disaster that has killed more than 1,200 people.
Any pullback in spending could weigh heavily on Nepal’s roughly $45 billion economy. Private consumption accounted for about 82% of Nepal’s gross domestic product in the fiscal year ended mid-July, according to the National Statistics Office. Nepal is one of Asia’s poorest economies with output per person about $1,500, little more than half the South Asian average.
The disaster comes at a particularly difficult time for the Himalayan nation, which was already grappling with higher fuel costs and weaker tourism before the floods. Reconstruction could cost Nepal at least $5 billion. The government has announced relief measures for flood survivors, including free medical care in government hospitals and shelter for displaced people.
It has also directed the finance ministry to prepare a relief, concessional-financing and rehabilitation package for affected individuals and businesses, though details have yet to be announced. Nepal’s Ministry of Industry, Commerce and Supplies and Finance Ministry did not respond to requests for comment. The damage to trade routes poses a broader problem for an economy heavily reliant on inbound shipments.
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