Investor confidence weakened after “Gen Z Movement,” NRB Governor Poudel

6th November 2025, Kathmandu

The recent Gen Z protest that swept across Nepal on September 8 and 9, has cast a long shadow over the nation’s already fragile economic climate, delivering a significant blow to both investor and business confidence.

Investor Confidence Weakened

As articulated by Nepal Rastra Bank (NRB) Governor Dr. Biswo Nath Poudel, the youth-led movement has further weakened investor morale, exacerbating a pre-existing condition of stagnant investment even when money was available in the market. This upheaval, triggered by a social media ban and fueled by deep-seated frustrations over corruption, unemployment, and political elite capture, has ignited an essential, though costly, conversation about Nepal’s future.

The Damaging Fallout: Weakened Confidence and Economic Costs

The core impact of the Gen Z movement has been the pervasive erosion of trust in the safety and stability of the operating environment for businesses. Nepal was already struggling to attract large investments due to structural issues, and the protests have amplified the perception of risk for both domestic and foreign capital.

Dampened Investor Sentiment: The violence and destruction, which saw major corporate houses and international hotels like Bhat-Bhateni Supermarket, Chaudhary Group, and Hilton Kathmandu targeted, sent a profoundly negative signal. The government’s perceived inability to protect private property has exposed the fragility of Nepal’s investment climate. Foreign Direct Investment (FDI) commitments, which had shown an initial surge, are now at risk of being significantly dampened in the months ahead as investors reassess country risk. The perception that business success is illegitimate or vulnerable to political unrest further weakens entrepreneurial morale, leading firms to adopt defensive rather than expansionary strategies.

Massive Financial and Insurance Sector Shock: Preliminary estimates of damage to private property are staggering, running into the billions of rupees. The non-life insurance sector is grappling with an unprecedented surge in claims, far surpassing previous crises like the 2015 earthquakes, which threatens to cripple some companies and exposes vulnerabilities in the reinsurance framework. This massive, sudden loss diverts both public and private resources away from development and toward reconstruction.

Impact on Key Sectors and Jobs: Sectors heavily reliant on stability and image, such as tourism and hospitality, have suffered immediate and extensive losses, with estimates of industry losses in the billions and thousands of job cuts. The automobile and retail sectors also faced severe setbacks due to vandalism and operational disruption. The overall economic growth projection for the current fiscal year has been dramatically revised downwards, with the World Bank capping growth at a much lower rate than previously expected.

The Stock Market Jolt: The immediate aftermath saw the Nepal Stock Exchange (NEPSE) Index plunge sharply, reflecting immediate investor nervousness and a flight from risk amidst the persistent uncertainty of the post-protest environment.

Calls for Systemic Reform and Responsible Governance

The political response to the Gen Z uprising highlights a widespread acknowledgment of the need for deep, systemic change. Leaders across the political spectrum have recognized the protest as a reflection of long-term public dissatisfaction, not just a fleeting incident.

Focus on Systemic Change: Leaders from parties like CPN-UML (Pradeep Gyawali) have urged political parties to shift their focus towards systemic reforms rather than individual-centric politics, acknowledging the root cause lies in the dysfunctional system.

Acceptance of Responsibility: The Nepali Congress (Pradeep Paudel) accepted that the movement was, in part, a directed criticism of the ruling party, signaling a necessary acceptance of political accountability.

Rebuilding Trust and Justice: The RPP noted that the current political landscape is fraught with distrust and complexity, a sentiment echoed by the Attorney General, who highlighted the need for evidence-based justice and ongoing legal processes to manage the post-protest environment.

Addressing Root Causes: The protesters’ core demands for accountability, an end to corruption, and better economic opportunities—which fuel the massive brain drain of young, skilled manpower—are now central to the national political debate. The call for a directly elected executive is also part of the conversation, as advocates argue it could bring greater political stability and cost-effectiveness.

The Path Forward: Stability, Security, and Opportunity

The consensus among economists and political analysts is that restoring investor confidence is the most critical immediate task for the government. This requires more than just rhetoric; it demands tangible actions to ensure security and institutional credibility.

The key to turning this crisis into an opportunity, as Attorney General Sabita Bhandari suggested, lies in translating the youth’s demands into lasting institutional renewal. The political leadership must prioritize transparent governance, policy consistency, and a genuine effort to address the structural economic issues of youth unemployment and corruption. Visible, swift reconstruction of damaged infrastructure, combined with a credible security guarantee for both domestic and foreign investors (FDI), is paramount. Without decisive, sustained policy and institutional reforms, Nepal risks a prolonged investment drought, further impeding its long-term economic strategy and vision for growth.

The Gen Z movement, while financially and psychologically costly, has served as an undeniable wake-up call, forcing the nation to confront the deep chasm between its political elite and the aspirations of its youth. The real test now is whether the established political machinery can harness this energy to build a stable, secure, and opportunity-rich New Nepal that can once again attract the confidence of investors globally.

For More: Investor Confidence Weakened