📈 Why Tourism?
Nepal, a vibrant South Asian country, is home to nearly 29 million people. Its economy thrives on agriculture, responsible for a third of its GDP, tourism which covers around 7% of the GDP, and remittances sent by overseas workers make up over one-fourth of Nepal's GDP. However, it struggles with issues like poverty, which affects 25.2% of its population, and insufficient infrastructure development, providing basic sanitation to merely 39% of the residents.
The nation grapples with a trade deficit, having imported $12.4 billion worth of goods while exporting only $918 million in 2020-21. India, the United States, and Germany are their primary export destinations; conversely, most imports come from India, China, and the United Arab Emirates. Despite making efforts to boost exports, Nepal faces hurdles like underdeveloped infrastructure, low productivity, and restricted access to finances.
For Nepal to secure macroeconomic stability and alleviate risks from external shocks amidst this trade deficit scenario, foreign reserves play an essential role. These reserves help finance imports, repay international debts, and stabilize exchange rates. Inadequate reserves could lead to borrowing at exorbitant interest rates and might aggravate economic tribulations.
Remittances serve as a vital source of foreign exchange for Nepal; however, they also present challenges like brain drain for the country's development. The departure of skilled youth obstructs innovation, productivity enhancement, and overall economic growth. Additionally, labor shortages in certain sectors could hinder development and intensify poverty.
Tourism emerges as a more sustainable alternative to remittance in Nepal since it generates job prospects, bolsters revenue streams, and fosters local entrepreneurship. On top of that, tourism contributes to preserving and showcasing Nepal's rich cultural and natural heritage – empowering local economies while alleviating poverty.