It all started in China in December last year. The coronavirus outbreak threatened the nation’s health as well as its economy. The Chinese government took drastic measures to control the spread. Now with the spread largely contained, China is trying to get back on its feet. Covid-19, the disease caused by the virus, however, has by now taken the shape of a pandemic. Nepal may not have reported any new cases, but its trade and investment have taken a huge beating, as the rest of the world struggles to cope with the virus.

“Since the coronavirus outbreak in China, we have seen nominal presence of foreign investors at our office,” said Jiwan Prakash Sitaula, director general at the Department of Industry. “Now with the global outbreak, we have not received even a single foreign investment application in the last two weeks.”

During the first six months of the current fiscal year, foreign direct investment (FDI) pledges increased by 315.3 per cent to Rs190.36 billion, according to the Department of Industry, which is responsible for registering industries including those with foreign investments.

Most of the foreign investment commitments were received from China.

Foreign investment is one of the sectors affected by the novel coronavirus, which has so far infected more than 145,000 people and killed 5,000 people globally.

The Nepal government on Thursday temporarily stopped issuing on-arrival visas to tourists from all countries, put an end to all spring mountaineering expeditions, including Everest ascents, and halted the issuance of labour permits—all to prevent the spread of Covid-19. This meant a huge blow to the tourism and aviation sectors.

Now while foreign investments have slowed, the virus impact is being seen on the trade sector as well.

One of the exports that has massively suffered is handicraft.

“Exports have practically stalled for now,” said Dharma Raj Shakya, immediate past president of the Federation of Handicraft Association of Nepal, a grouping of handicraft producers. China, Europe and the United States are major markets for Nepali handicrafts and they too are struggling in the wake of the Covid-19 outbreak.

“Our statistics show that monthly export is worth around Rs1 million to Rs 1.5 million,” said Shakya. “Foreign tourists used to purchase handicrafts in Thamel and other tourist spots and handicrafts sales in these areas have also gone down as tourists are no longer coming to the country.”

According to the federation, handicraft exports are worth around Rs6 billion a year.

Shakya said handicraft production has also been affected due to a shortage of raw materials, which mostly come from China and other virus-hit countries.

“For example, wool and yarn come from China for pashmina products and metals come from China and Singapore for metal crafts,” said Shakya.

Exports of garment and carpets are also expected to suffer as they depend largely on Europe and the United States.

Since China is the second-largest trading partner, imports have also been hugely affected.

Importers said that imports have come down drastically since February. Currently, movement of people and goods has been halted at both border points with China—Rasuwagadhi and Tatopani.

Bachhu Poudel, president of the Trans Himalaya Border Commerce Association, a grouping of traders involved in Nepal-China trade, said that there has been no import of goods from China through the land routes for the last two months and import through the sea routes has also been largely halted.

“We used to supply new goods in the market at an interval of 15 days to one month, which is not happening now,” he said. “There is no big demand for goods from the market.”

The share of wholesale and retail activities in the local economy is the second-largest after agriculture.

“If the situation prolongs, more people who depend on the trading sector may lose their jobs,” said Poudel.

Businessmen say they have not been able to import raw materials needed for various industries as well, particularly from China.

With several businesses affected, banks and financial institutions are worried about the recovery of loans.

According to the Nepal Rastra Bank, the banks and financial institutions have loan exposure of Rs138.68 billion in the hotel and restaurant sectors as of the first seven months of the current fiscal year. “We are also worried about the recovery of the loans,” said Bhuvan Dahal, president of Nepal Bankers’ Association, a grouping of chief executive officers of the commercial banks. “Let’s see what happens by the end of the third quarter [mid-April], when the repayments are to be made.”

As Covid-19 poses a threat to various businesses, Nepal’s economy is staring at a slowdown.

Asian Development Bank, in its recent report, projected that the country’s economy could lose from $12.12 million to $36.78 million depending on the extent of the pandemic. “It may result in job losses for 5,210 to 15,880 people,” the report unveiled in early March stated.