In 2016, people living abroad sent an estimated $6.6 billion in remittances in Nepal. This made Nepal number 1 in the world in terms of remittance as percent of Gross Domestic Product (GDP).
Nepal received remittances of $6.6 billion equivalent to 31.3% of its GDP, according to a Pew Research Center analysis of World Bank data for 2016. Nepal topped the list last year as well with remittances accounting for 31.5% of its GDP.
It was closely followed by Kyrgyzstan which had nearly $2 billion in remittances, equivalent to 30.4% of GDP. Then Tajikistan, which received about $1.9 billion (equal to 26.9% of GDP). Haiti and Liberia join the list with more than 25% remittances to make the top 5 countries in the world in terms of remittance.
All these countries bear two important similarities: they have relatively small economies and largely scattered population.
Nepal’s GDP in 2016 was $21.1 billion making it the 96th in the world by purchasing power parity. Out of the total GDP, $6.6 billion came from remittances.
It is said that remittances have represented more than 10 percent of GDP of Nepal in the late 1990s. Remittances in 2012/13 contributed around $3.5 billion a year to Nepal’s annual income, up from just $50 million in the mid-1990s, and equivalent to almost a quarter of GDP. And in 2016, it exceed a quarter of GDP by almost 7%.
Nepal’s remittances come mainly from Qatar, Saudi Arabia, India and the United Arab Emirates.
According to Pew Research, remittances can reduce the depth and severity of poverty in developing countries, and that they’re associated with increased household spending on health, education and small business.
Though Nepal is currently doing well from remittances, one country’s immigration policies can have significant effects on other, more remittance-reliant countries. If one of the major remittance earning countries changes its policies, thousands of Nepalis can lose their jobs at once.