The emergence of a new variant of the coronavirus has cast a veil over Nepal’s manufacturing and trading sectors as it threatens to dampen Nepal’s slow economic recovery.
Following the outbreak of the Omicron virus around the world, business and industry leaders fear another wave of infection could cause crippling lockdowns, just as the economy begins to rebound after two years of despair.
Dinesh Shrestha, vice president of the Federation of Nepalese Chambers of Commerce and Industry, said the new variant had started to worry the private sector.
“The government must start to act quickly,” he told the Post. âNepal cannot afford to endure another lockdown now. “
The private sector has suggested strict inspection at all land entry points and at the international airport to prevent the new variant from entering the country.
The Omicron virus has been detected in India with two people in Karnataka testing positive for the new variant, according to reports.
And it is spreading. The virus has so far been detected in Australia, Austria, Belgium, Botswana, Brazil, Canada, Denmark, France, Germany, Hong Kong, Israel, Italy, Japan, Netherlands, Nigeria, Norway, Portugal, Saudi Arabia, South Africa, South Africa Korea, Spain, Sweden, United Kingdom and United States.
Nepal suffered two blockages: the first on March 24, 2020 which continued until July 21, and a second blockade on April 29, 2021 which continued until September 1.
With all of the population confined to their homes and businesses closed for months, the economy disintegrated and Nepal experienced its first economic contraction in nearly four decades in fiscal year 2019-2020. The economy contracted 2.1%.
The Covid-19 has killed 11,535 people in Nepal.
The country’s business activities, except for the tourism industry, were on track to recover with 87.2% of businesses and industries resuming operations as of October.
A recent follow-up survey on the impact of Covid-19 on the economy published by the Nepal Rastra Bank showed that transactions and production in the agriculture, forestry and fisheries sectors reached 79, 3% of previous levels.
The minerals and exploration sector and the electricity, gas and water sector have experienced the fastest recovery, and companies in these sectors are now 100% open, according to the survey.
The latest survey reveals that 78.7% of hotels and restaurants are fully open, while 21.3% are partially open.
The construction industry said 88.9% of the sector was fully open while 87.1% of manufacturing was fully open from pre-Covid levels.
The World Health Organization said on November 28 that it was working with technical partners to understand the potential impact of the new variant on its existing countermeasures, including vaccines.
But health experts are uncertain whether the existing vaccination against Covid-19 will work against the new variant, Omicron, a highly contagious variant of SARS-COV-2. The World Health Organization said on Friday that the new variant of the coronavirus was “of concern”, the same category as the highly transmissible variant Delta.
Nepalese business circles fear that the new variant will force the government to impose shutdowns as a quick measure to contain a possible transmission.
Economist Keshav Acharya said: âThere is news that the new variants are highly transmissible and existing vaccines do not work on them. We still don’t know what’s going to happen. It’s uncertainty again.
The number of cases involving the new variant is increasing globally, especially in Europe, the United States, Latin America and Africa. âAlthough the government has stopped flights from African countries, there is no chance that new variants will not arrive here,â Acharya said.
âIf the new variant comes and takes the lives of people, including young people like in the second wave of Covid-19, it will have negative impacts in many ways,â Acharya said.
The market and government have failed to respond to reports of the new variant first detected in South Africa.
Oil prices fell on November 30, according to Reuters, after the Moderna chief questioned the effectiveness of the Covid-19 vaccine against the Omicron variant of the coronavirus, spooking financial markets and increasing concerns over demand for oil.
The country’s economic indicators are already not in a good position with increasing imports, depleting foreign exchange reserves, negative growth in remittances and lack of budget spending, economists said.
Rising fuel prices, rising global transportation costs and the appreciation of the dollar have hit the domestic market with food and non-food inflation.
Acharya said government resources would have to be mobilized again in the health sector, socio-economic infrastructure would be on the priority list and economic activities would contract.
“And if the government imposes a lockdown again to control the spread of the new variant, the resulting contraction in economic activities will lead to increased unemployment, reduced production, lost revenue for the government, an inability to repay bank loans and a surge in imports of essential goods, âhe said.