Middle East Conflict Poses Risks to Nepal’s Economy and Migrant Workers

Experts have warned that the escalating conflict involving the United States, Israel and Iran could affect Nepal’s economy and the lives of thousands of Nepali migrant workers in the Gulf region.

Following military strikes by the United States and Israel on Iran, Tehran reportedly launched retaliatory air attacks targeting US military bases in Gulf countries where a large number of Nepali migrant workers are employed. Analysts say prolonged instability in the region could disrupt employment and remittance inflows, which remain a key pillar of Nepal’s economy.

Although exact figures of Nepalis residing in Saudi Arabia, the United Arab Emirates (UAE), Qatar, Bahrain, Oman and Kuwait are unavailable, the majority of Nepali migrant workers head to these destinations. A significant portion of Nepal’s remittance earnings originates from these countries.

Experts say it is too early to assess the immediate impact of the conflict on employment and remittance flows. However, they caution that if the war drags on, Nepal will not remain unaffected. Apart from remittances, a prolonged conflict could push up global oil prices, affecting the world economy and increasing inflationary pressure in Nepal.

Middle Eastern countries remain the primary destination for Nepali migrant workers. In the first six months of the current fiscal year, 99,800 Nepalis obtained labour permits for the UAE, while 72,247 left for Qatar. Similarly, 72,303 Nepalis went to Saudi Arabia, 26,440 to Kuwait, and 1,019 to Israel, according to official data.

Labour migration expert Rameshwar Nepal said the unrest in the Middle East has created anxiety among Nepalis living and working there. He stressed that the government should immediately coordinate through its diplomatic missions to reassure citizens and ensure their safety.

“The state must prioritise the safety of its citizens,” he said, adding that Nepal should also prepare contingency plans for rescue operations if the situation deteriorates. He further noted that with unemployment already high at home and some workers having already purchased tickets for Gulf destinations, the government should also address the concerns of those whose travel plans have been affected.

Following the attacks, international airports in Doha, Dubai and Abu Dhabi were reportedly closed on Saturday, affecting international flights, including some operating from Tribhuvan International Airport.

Nepal, which remains heavily dependent on remittances, could face serious economic repercussions if the conflict intensifies, the expert warned. According to Nepal Rastra Bank, the country received Rs 1.062 trillion in remittances in the first six months of the current fiscal year. A 2019 study showed that around 52 percent of Nepal’s total remittance inflow originated from 10 countries in the Middle East.

Nepal also imports various goods from the region. Products ranging from dates, biscuits and perfumes come from Iran, while petroleum products and raw materials essential for Nepali industries are imported from Gulf countries.

Hemraj Dhakal, Vice-President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said prolonged instability in the Middle East could significantly affect domestic industries.

“The Russia-Ukraine war had severely affected Nepal’s economy, particularly the supply of raw materials,” he said. “If the current Middle East conflict continues for long, Nepal will again face serious consequences.”

He warned that disruptions in oil supply could drive prices higher in Nepal. According to him, Nepal imports gold, copper, plastics, petroleum bitumen, lubricating oil, coal, urea and steel products from Middle Eastern countries.

Attacks Escalate Amid Nuclear Tensions

The latest escalation came amid rising tensions in US-Iran nuclear negotiations. Israel, reportedly in coordination with the United States, carried out strikes on Iran on Saturday.

Before the attacks, Iran had been engaged in talks with the United States regarding its nuclear programme. Following the strikes, Iran announced retaliatory action, targeting US military assets in Gulf countries including Qatar, Kuwait, the UAE and Bahrain, where American bases are located.

Amid the growing tension, the Government of Nepal has urged Nepali nationals in Israel and Iran to exercise high caution and remain safe.

The Ministry of Foreign Affairs issued a travel advisory on Saturday, urging Nepalis to avoid travel to Israel and Iran until the situation normalises. The ministry also asked those already residing there to strictly follow security advisories issued by local authorities, remain indoors as far as possible, stay alert and maintain contact with the Nepali community.

It has further advised Nepalis not to travel without prior approval from local authorities and urged those planning to travel to Israel or Iran for employment or other purposes to postpone their trips until further notice.

Nepalis living and working in other Middle Eastern countries have also been urged to closely monitor developments and follow precautionary measures issued by local authorities.

The ministry has published contact details for emergency coordination and advised citizens to remain in regular contact with the Ministry of Foreign Affairs in Kathmandu, the Nepali Embassy in Tel Aviv and the Nepali Embassy in Doha.