Remittances and Domestic Investment in Nepal: A Shift in Financial Priorities During a Crisis

Remittances have long been a vital economic pillar in Nepal, making a significant contribution to both household income and the country's gross domestic product. But because of the disruption of worldwide travel patterns caused by the COVID-19 epidemic, remittance inflows have decreased, and the nation's financial priorities have had to be reevaluated. In order to better understand how individuals and policymakers have responded to the economic challenges presented by the crisis, this study examines the impact of decreased remittances on domestic investment. Using a Keynesian analytical framework and secondary data, the study investigates the connections among investment, consumption, and remittances in Nepal. The results show a significant change in household spending patterns, with money being moved from consumption to investments in small businesses and farming. Remittances can be leveraged for sustained economic development, especially in times of economic uncertainty, according to the study's policy suggestions at the end.