Udaya Raj Adhikari's Blog

1. Introduction: Growth Shock A raging pandemic unleashed by a highly contagious COVID-19 virus has triggered unprecedented restrictions not only on the movement of people but also on a range of economic activities, and the declaration of national emergencies in the worldwide. Growing demand for urgent healthcare and rising death tolls are straining national healthcare systems. The pandemic is disrupting global supply chains and international trade.   With nearly 100 countries closing national borders during the past month, the movement of people and tourism flows have come to a screeching halt. Millions of workers in these countries are facing the bleak prospect of losing their jobs. Governments are considering and rolling out large stimulus packages to avert a sharp downturn of their economies which could potentially plunge the global economy into a deep recession. In the worst-case scenario, the world economy could contract by 0.9 percent in 2020 (Figure 1). The coronavirus ...

Before the global health crisis began , banks usually had a surplus foreign exchange on account of remittance which makes up more than 26 % of the GDP. They had extra funds which they sold to the central bank after fulling their market requirements. The central banks maintain foreign exchange based on the funds received from all banks and financial institutions. For instance if banks are not receiving sufficient foreign exchange reserves from tourism, export, and other factors of external sectors due to the decrease in the inflow of remittance. Then there will be low selling foreign exchange to the central bank by commercial banks. Since, Nepal is heavily dependent on the import of a number of essential goods such as food items, medicine, and petroleum products. With COVID-19 and recent lockdown across the globe, there is a rapid slowdown in foreign exchange into the nation. The inflow to go down further until the situation improves. As a result there will be a hard hit in the reserve...