Secondary Income Boost: Remittances Keep Nepal’s Economy Afloat Amid Trade Gap

Nepal’s economy remains heavily reliant on migrant earnings as secondary income — led by remittances — surged to Rs. 195 billion in the first month of FY 2025/26, according to Nepal Rastra Bank’s latest Balance of Payments (BoP) data. The figure marks a sharp rise from Rs. 148 billion during the same period last year, reflecting the continuing strength of remittance inflows even as the nation grapples with a deep trade deficit.

Workers’ remittances alone reached Rs. 177 billion, accounting for more than 90 percent of Nepal’s total secondary income. This steady inflow of foreign currency has offset a massive goods-trade deficit exceeding Rs. 109 billion, allowing the current-account surplus to climb to Rs. 78 billion — one of the highest in recent years.

Economists note that remittances have once again kept Nepal’s economy afloat, propping up household consumption, foreign-exchange reserves, and overall macroeconomic stability. However, they caution that this dependence represents a structural imbalance: production and exports remain weak while income from abroad fills the gap.

Without substantial domestic job creation and export diversification, analysts warn, Nepal risks being trapped in a remittance-dependent growth model vulnerable to external shocks — such as Gulf policy shifts or declining labor demand in Malaysia and the Middle East.