Inspired by the Tidbid threads started by my good friend Bathroom Coffee, I thought I'd start a blog of random ideas, opinion and analysis. Feel free to weigh in with your thoughts.

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Nepal's Remittance Economy

We top South Asia in remittances as a percentage of GDP



Remittances now make up 14% of GDP, accoring to this report from the International Fund for Agriculture Development. While our neighbors India and China lead the field in Asia in terms of total dollar amounts, remittances are only a small percentage of their GDP making up 2.7% of India's and 0.8% of China's.

It's also interesting, and perhaps no surprise, that services now make up almost 40% of Nepal's GDP, at par with agriculture (1).I remember a time when agriculture made up close to two thirds of the GDP. I currently don't have sector and sub-sector breakdown of the GDP data but if I were to make a guess, remittances, besides banking and INGO cash inflow, are likely to be big contributors to changing nature of income in Nepal.

On the upside, I interpret this to mean many Nepalese are earning and spending more money than they would have had they stayed home. This is normally a good thing for the economy. On the downside, Nepal is potentially loosing a young workforce who could be working on the business opportunities the inflow of cash can create. Also, because it is more lucrative for our workforce to work outside the country, could it create a long-term shortage of skilled labor in Nepal? Or like India and China, will we simply be able to produce and educate more people to fill up the gap over the years?

Just some random thoughts.