The World Bank’s Country Economic Memorandum (CEM) on Nepal titled Climbing Higher: Toward a Middle Income Nepal says that despite a rapid reduction in the poverty rate, there is an urgent need to change Nepal’s development path because it is not leading to economic growth. If this trend continues, the report warns that Nepal will not meet the goal of graduating to middle income country status by 2030. Remittances are a safety valve but also ‘a symptom of deep, chronic problems’ but are not being used to generate economic activity and greater opportunity.

‘This cycle compounds existing and longstanding challenges that hamper Nepal’s competitiveness, furthering weak growth and limited domestic opportunities,’ it says. All these factors combined mean that Nepal could be stuck in a low-growth, high-migration equilibrium for years to come. Mopney sent home by Nepali workers abroad help pay for household expenses, but they are doing little to improve public service, development and investment. The report says that is why the quality of education, health care, and infrastructure remain ‘abysmal’.

The report adds that low economic growth has perpetuated a shortage of jobs at home, which in turn is fueling further outmigration. This has led to a loss of competitiveness and reduced pressure to generate more productive employment in Nepal. The report concludes: ‘This cycle compounds existing and longstanding challenges that hamper Nepal’s competitiveness, furthering weak growth and limited domestic opportunities … meaning that Nepal could be stuck in a low-growth, high-migration equilibrium for years to come.’

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