The Iran-Israel war might feel distant, but its impact on Nepal’s remittance, inflation, and household income could be massive. Here’s what’s at stake.

When you hear about missiles flying over Israel or Iran firing back with drones, your first reaction might be, “That’s sad, but what’s it got to do with us here in Nepal?”

The answer? Everything.

Even though we’re thousands of kilometers away, this war could hit our lives in ways we don’t even realize. From the price of oil to the safety of our loved ones working abroad, and even how much money we have to spend at home, it’s all connected.

Because here’s the thing: Nepal’s economy depends heavily; really heavily on the money that Nepalis working abroad send back home. And a lot of those workers are in the very region where this war is playing out (places like Israel, UAE, Saudi Arabia, Qatar.)

So when bombs fall there, our economy shakes here.

So, What’s Happening Between Israel and Iran Right Now?

Alright, here’s the short version of what’s been going on:

About two weeks ago, Israel and Iran started attacking each other. Missiles, drones, airstrikes, you name it. Things got so intense that even the U.S. jumped in, bombing Iran’s nuclear sites. Iran responded by firing at a U.S. air base in Qatar.

Hundreds of people were killed in Iran, including civilians. Israel had fewer casualties, but still lost lives. It wasn’t just a “warning shot” kind of fight, it was a full-blown military clash.

Flights were rerouted. Oil prices went up. Everyone held their breath.

Then came June 24. After 12 days of attacks, a ceasefire was finally brokered by the U.S. Both sides agreed to stop fighting for now.

So, is the war over?

Not exactly.

The ceasefire is holding for the moment, but it’s fragile. Both sides have already accused each other of breaking the truce. The U.S. says the strikes damaged Iran’s military and nuclear sites, but didn’t destroy them. In other words, the root problems are still very much there.

It’s like putting a lid on a boiling pot, it might not be spilling over right now, but it’s still dangerously hot underneath.

What Does This Mean for Nepal?

Here’s where we come in.

• Thousands of Nepalis work in Israel, Qatar, UAE, and Saudi Arabia, right in the middle of all this.
• Remittances from these workers are a lifeline for families back home and for our national economy.
• A full-blown war or even prolonged instability could mean lost jobs, canceled contracts, or urgent evacuations.
• And even if there’s no further fighting, oil prices and inflation could skyrocket again.

In fact, the Nepali government is already on alert. The embassy in Tel Aviv has opened emergency registration for any Nepalis needing help. Lawmakers here are asking for regular updates. Plans for evacuation are being prepared.

That tells you just how serious this is.

The Deep Dependence on Remittance in Nepal

If you’ve ever waited for a monthly transfer from a loved one working abroad, you already know that remittance is survival for many Nepali families.

But it’s not just about one household. It’s about an entire economy.

More than one out of every four rupees in Nepal’s economy comes from remittance. That’s huge. In fact, Nepal has one of the highest remittance-to-GDP ratios in the world.

Last fiscal year alone, Nepali workers sent home over $10.8 billion. That’s more than Rs. 1,400 billion flowing straight into local households.

And the outflow of workers hasn’t slowed down either. In FY 2080/81, over 741,000 Nepalis left the country for foreign employment. That’s more than 2,000 people flying out every single day, chasing better opportunities to support their families back home.

Where Are They Going?

Behind each of these numbers is a story; a son helping his parents build a home, a daughter funding her siblings’ education, a father keeping the kitchen running back home.

But here’s the worry: most of these workers are in the Middle East, the very region now caught in rising conflict. If tensions escalate, and borders close or companies pause hiring, those workers could lose their jobs overnight. That means families lose income, and the effect doesn’t stop there.

When remittance slows down, it leads to:

• Less spending in local shops
• Fewer children staying in school
• Stalled house construction projects
• Lower government tax collection
• An overall slowdown in the economy

In short: when a worker loses income abroad, the impact ripples all the way back home.

A Closer Look at the Numbers: How We Got Here

Foreign employment hasn’t just supported families, it’s transformed Nepal’s economy over the last two decades.

Back in 2005, Nepal received just $1.2 billion in remittances. By 2023, that figure had crossed $11 billion. That’s almost a tenfold increase in less than 20 years.

This steady growth has helped lift millions out of poverty, improved household living standards, and kept our foreign exchange reserves stable.

But it’s also made us deeply dependent on external labor markets. And now, with war clouds over West Asia, that dependence looks more like a vulnerability.

Because if bombs keep falling in Israel or tensions spread to the Gulf, it’s not just a foreign policy issue. It’s a household crisis, a national economic emergency, and a wake-up call.

Remittance in Nepal isn’t just personal anymore. It’s everything.

Here's more on the pros and cons of foreign employment in Nepal, its impact on the economy, families, and the nation's future.

First in Line: Nepali Workers in Israel and the Risk of Sudden Repatriation

Let’s zoom in for a moment.

While the world watches missiles fly between Israel and Iran, around 1,000 Nepali workers are quietly living through the chaos, right in the middle of it. Most are employed as caregivers, farmhands, or in similar blue-collar jobs. They didn’t sign up for a war, but now they’re caught in one.

Imagine being one of them.

You left your village with big hopes, went through the whole visa process, paid recruitment fees, and finally landed a job in Israel. And just when things start settling down, boom: sirens, shelters, missiles. Now you’re checking the news more than your work schedule, wondering if you’ll even get paid this month, or get sent home without notice.

It’s not just scary. It’s financially devastating.

That’s why the Nepali government has started registering citizens in Israel who might need help. Evacuation is being prepared as a backup plan. Lawmakers are pushing for updates. Everyone knows that if the conflict reignites, we can’t wait for things to get worse.

But even if no one gets hurt physically, there’s a bigger concern:

If Nepali workers are forced to leave Israel or lose their jobs, that remittance stops.

And when the money stops flowing from there, life back home starts to unravel, from children’s tuition to daily meals.

What Happens If the Gulf Gets Pulled In?

Here’s the part that really keeps economists, and families awake at night.

While Israel and Iran dominate the headlines, most Nepali workers abroad aren’t in either of those countries. They’re in the Gulf region; places like the UAE, Saudi Arabia, Qatar, and Kuwait.

In fact, nearly two-thirds of all Nepali migrant workers are in these countries. And they send back the majority of our total remittance inflow, which adds up to over Rs. 1,400 billion a year.

So, what happens if the Gulf countries get dragged into the conflict, directly or indirectly?

It doesn’t even take a full-blown war. Rising tensions, airspace restrictions, or retaliatory strikes near U.S. bases (like the one Iran recently hit in Qatar) are enough to shake things up.

Here's what that might look like:

• Hiring freezes: Companies in the Gulf put recruitment on hold.
• Layoffs: Businesses cut costs; migrant workers are the first to go.
• Flight rerouting or suspension: Travel becomes expensive, or impossible.
• Remittance in Nepal dips: Less income going home, less money circulating in Nepal’s economy.
• Emergency evacuations: Chaotic, expensive, and traumatic for workers and families alike.

Even if the fighting doesn’t reach the Gulf directly, the economic shockwaves could. The region’s oil-rich economies are deeply tied to global stability. If oil prices go haywire, or if political risk spikes, employers might start downsizing or shifting priorities.

And again, it’s not just about workers abroad. It’s the family in Dang or Morang who depends on that monthly transfer to buy food, pay school fees, or cover hospital bills.

How This Conflict Chokes Remittance Flows

Here’s where it all starts to connect, and get a bit scary.

When workers lose jobs or can’t send money due to conflict, it's not just families that feel the pinch. The whole economy takes a hit. Let’s break down how this plays out.

First: Job Security Takes a Hit

Geopolitical tensions don’t just scare off tourists, they make companies nervous too. In uncertain times, employers often cut costs, pause projects, or lay off foreign workers. And unfortunately, Nepali workers; being among the most replaceable, often face the brunt.

Fewer working hours or lower wages means smaller remittances. And that’s exactly what we saw during COVID, when remittance in Nepal dropped suddenly, even before workers had a chance to return.

Then: Payment Systems Become Risky

When conflicts escalate, international banking systems can get tangled up in sanctions or technical disruptions.

Take the SWIFT system, for example; that’s how most global money transfers happen. When Russia was hit with SWIFT bans during the Ukraine war, people struggled to send or receive money. If anything similar happens in the Middle East, Nepali workers may not be able to send money through official channels, even if they’re still earning.

And while informal methods like hundi exist, they’re risky, unregulated, and make our economy harder to track or stabilize.

On Top of That: Digital Systems Aren’t Safe Either

As remittances go digital, they’re also becoming more vulnerable to cyberattacks, especially during wars. Banks and payment platforms rely on global systems that can be hacked, delayed, or corrupted in conflicts. It’s not science fiction. It’s happened before, like the Bangladesh Bank cyber heist through SWIFT in 2016.

That adds another layer of risk for migrant families and for Nepal’s central bank trying to manage foreign currency reserves.

In short:
Even a short-term conflict, or a shaky ceasefire can set off a chain reaction:

Worker loses job →
Family stops receiving money →
Spending drops across towns and villages →
Local businesses suffer →
Banks and the government feel the pressure →
The entire economy slows down

That’s why this isn’t just a news story for foreign policy nerds. This is a real-life economic emergency in slow motion, and Nepal is right in the path.

Nepali Households on the Edge: When the Money Stops, Life Slows Down

Let’s bring it down to the basics.

For millions of Nepali families, money sent home by a family member working abroad isn’t just extra income, it’s everything.

That money pays for:

• Food on the table
• Children’s school fees
• Medicine for parents
• Loan payments
• House repairs or new construction

So imagine what happens if that money suddenly stops coming.

Maybe the worker lost their job because of war. Maybe banks are blocked. Maybe flights got canceled and the worker had to return early.

Whatever the reason, the result is the same:
The money doesn’t arrive.
And life back home starts getting harder, fast.

People cut down on meals. They pull kids out of school. Medical checkups are postponed. Some are forced to borrow money just to get by. And many fall into debt traps they can’t easily escape.

We’ve seen it happen before, during COVID. Now, with this war, we might be heading into the same storm, just in a different way.

What Happens to Nepal’s Economy When Remittances Slow Down?

It’s not just individual families that get hit. When fewer workers send money home, the whole economy starts feeling the pressure.

Here’s how it plays out:

1. Less Foreign Currency = Expensive Imports

Nepal buys most of what it needs (oil, rice, medicine, construction material) from other countries. And to do that, we need foreign currency, mostly U.S. dollars.

When remittance in Nepal falls, fewer dollars come in.
But we still need to buy things.
So we pay more.
Prices rise. That’s inflation.

It starts with fuel. Then bus fares. Then vegetables. Then everything else.

So even if you don’t get remittance in your house, you’ll still feel the effect at the petrol pump and the grocery store.

2. Banks Tighten Up

When remittance in Nepal is flowing, banks have more money. That means they can lend easily.

But when money stops coming in, banks get nervous. They stop giving loans, or they make it harder to qualify.

This affects people trying to build homes, students applying for study loans, small business owners needing capital

That creates a slowdown; fewer new homes, fewer new businesses, fewer jobs.

3. Our Currency Feels the Heat

Less remittance also means the Nepali rupee gets weaker against the dollar. So everything we import becomes even more expensive.

It’s a chain reaction, and once it starts, it’s hard to stop.

The Long-Term Risk: Getting Stuck in a Remittance Trap

Here’s something to think about. Not just what’s happening this month, but what this means for Nepal’s future.

For years, we’ve been depending on remittance money to grow. And yes, it has helped:

• Families built houses
• Kids went to school
• Villages saw more shops and small businesses

But all that growth came from money earned abroad, not jobs created at home.

Now, when a conflict like this shows up and cuts off that money, it’s like pulling the power plug.

People stop planning for the future.
They stop investing.
They stop building.
They just try to survive.

And it hurts more than we think:

• Children drop out of school. That means fewer educated youth tomorrow.
• Families cancel health checkups. That affects long-term well-being.
• No savings. No investments. Just daily struggle.

Worst of all? It slows down Nepal’s ability to stand on its own feet.

Because to become stronger, we need to create jobs here, build businesses here, and produce goods here. But how can we do that when our main source of income; remittance, is so unpredictable?

It’s like trying to build a house on sand.

Bottom line?
This war may be happening in the skies over Israel and Iran, but its shockwaves are already hitting homes, shops, schools, and banks in Nepal.

And if we don’t act wisely, the damage could last long after the bombs stop falling.

What Can Nepal Do? Adaptive Responses and Policy Priorities

We can’t stop wars in the Middle East.
We can’t control global oil prices.
But we can prepare better for the shocks they bring.

This conflict is yet another reminder that Nepal is too dependent on things outside its borders, especially remittance in Nepal. And while remittance has lifted millions out of poverty, we need to ask: What’s our backup plan if it slows down or stops?

Here’s what Nepal can and should do, starting now:

1. Support Our Workers Before and After They Go Abroad

• Build better systems to track Nepalis abroad, so we’re not scrambling during emergencies.
• Make pre-departure orientation more useful. Workers should know how to protect themselves in conflict zones.
• Create stronger reintegration programs for returnees, so they don’t come back to zero support.

If we treat labor migration like a national priority (because it is), we need to treat our workers like national assets.

2. Diversify Where We Send Workers

Right now, almost all our eggs are in the Middle East basket. That makes us vulnerable.

We’ve already seen Japan, Romania, and Eastern Europe open up to Nepali workers. Let’s double down on that. More agreements, more language training, more processing centers.

A wider spread of destinations = lower risk during regional conflicts.

3. Turn Remittance into Investment, Not Just Consumption

Currently, over 75% of remittance in Nepal is used for household expenses. That’s understandable, but not sustainable.

Government and private sectors need to:

• Offer low-risk saving schemes for migrant families
• Create investment tools linked to remittance (like small business seed funds)
• Provide financial literacy so that families can use the money to grow, not just survive

4. Build Jobs at Home

We say this a lot, but now it’s urgent.
More local jobs mean fewer people need to leave in the first place. That means more economic control stays within Nepal.

How?

• Invest in agriculture, tourism, and small manufacturing
• Support youth-led startups and skills programs
• Make it easier for returnees to start businesses

5. Plan for the Next Shock, Because There Will Be One

This won’t be the last crisis. So let’s:

• Strengthen foreign currency reserves
• Modernize digital remittance systems and protect them from cyber threats
• Build emergency response units to assist Nepalis abroad in conflict zones

The goal? To move from panic mode to prepared mode.

Final Thoughts

At first glance, the Iran-Israel war might seem like someone else’s problem.

But in this particular case, where remittance in Nepal keeps families fed, children educated, and the economy running, this is very much our problem.

We may be far from the battlefield, but we’re dangerously close to its ripple effects.

The missiles may not land here,
But the impact already has.

Now is not the time to panic.

But it is time to rethink.

To prepare.

To build a future where one war across the world doesn’t threaten the hopes of a whole nation.

Because the world isn’t getting any calmer.

And Nepal needs to get smarter.

Related Articles:

• Foreign Employment in Nepal: Economic Lifeline or Long-Term Risk?
• Dubai Currency in Nepal: Full Guide for Workers & Families
• The Great Nepali Paradox: Issuance of Labour Permit Increases while Remittance Inflows Take A Dip