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Why Nepal's economy hinges on foreign job markets and interest rates

Sahaj Raj Malla

May 19, 2026

Nepal receives remittances from workers abroad equal to roughly a quarter of its GDP. This study shows that remittances depend heavily on job growth in destination countries (India, Gulf states, Malaysia) and drop when Nepal's central bank tightens monetary policy. The finding matters because many developing economies rely on remittances as their financial backbone, yet rarely coordinate migration policy with monetary decisions.
Published as External Demand, Domestic Monetary Conditions, and Remittance Dynamics in Nepal arXiv:2605.19401
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