Unleash the Wave: Nepal risks facing economic disaster

Nepal is facing economic paralysis. The risk of a new, even more devastating flood remains high, experts interviewed by Izvestia predict. Landslides have blocked the gorges through which two large rivers flow, the situation is aggravated by monsoon rains and intense melting of the Himalayan glaciers — as a result, a natural dam can burst and millions of cubic meters of water will pour on people. At the same time, the current damage from the destruction has already reached almost 10% of the country's GDP. The death toll has exceeded 900 people, and more than 2,000 are missing, including nine Russians. There are victims in Tibet as well. India also sees the threat of new devastating floods for the border areas. In Nepal, discontent with the actions of the authorities can result in mass protests and lead to a deep political crisis.

Should I expect another flood in Nepal

The massive flood that hit Nepal on August 26 has already claimed hundreds of lives and destroyed entire neighborhoods. According to the country's police, on August 31, the death toll rose to 919 people. The danger carries the risk of a repeated, even more catastrophic disaster. It can be caused by a huge underground mountain lake on the border of Nepal and China. It appeared as a result of a giant landslide that blocked the mountain gorges at the confluence of two major rivers — Chochen Khola and Purepu Tsangpo.

On the morning of August 27, the day after its occurrence, the volume of water in it was estimated at 2 million cubic meters. Over the next three days, about 3 million cubic meters more could enter the reservoir, which significantly increased the risk of a natural dam breaking and flooding the surrounding areas.

The risk of a repeat cataclysm is extremely high and is fueled by a whole range of natural factors, Elsa Shirgazina, a junior researcher at the IMEMO RAS Center for the Indian Ocean Region, explained to Izvestia. The monsoon season continues in the region, weather forecasts indicate that heavy rains will not stop in the near future. Heavy precipitation is superimposed on the intense melting of the Himalayan glaciers, which increases the flow of water into the blocked gorges.

The expert recalled that this sector of the Himalayas is characterized by high seismic activity, and any earthquake can instantly destroy natural dams. All four major river systems of Nepal are vulnerable — Mahakali in the west of the country, as well as Karnali, Gandak and Saptokosi.

At the same time, the Trisuli River basin is currently causing the greatest concern for relevant services, where the combination of heavy precipitation, melting ice and destruction after the first series of landslides has already created an extremely dangerous situation. Search and rescue operations at the hydroelectric power station have not yet been completed in this area, so survivors may remain at it, said Denis Korablin, head of the Interdepartmental Center for Himalayan Studies at the Institute of Oriental Studies of the Russian Academy of Sciences.

More than 2 thousand people are missing. At least nine Russians are among them, according to the Russian Embassy in Nepal. Kathmandu initially refused to involve foreign emergency services, hoping to manage on its own. However, as Elsa Shirgazina notes, pressure from foreign countries is growing: foreign partners insist on allowing their specialists to search for fellow citizens.

The Russian Ministry of Emergency Situations, in response to a request from Izvestia, reported that the humanitarian response involving the agency's forces in foreign countries is carried out by order of the president and the government of the Russian Federation.

Yesterday, at a meeting with Chinese President Xi Jinping in Bishkek, Vladimir Putin personally expressed his condolences to the families and friends of those killed in mudslides in the Tibet Autonomous Region of China near the border with Nepal. According to Chinese media, 16 people were killed, and over 500 more are missing.

India may also suffer from the elements. On August 28, the country's Foreign Ministry reported 320 missing citizens.

— The current situation in Nepal is assessed by the Indian authorities and analysts as a large-scale humanitarian and environmental disaster that directly affects Indian interests. As of the end of August 2026, the threat of new devastating floods for the border regions of India (especially the states of Bihar and Uttar Pradesh) remains at a high level due to the risks of a breakthrough of newly formed blocked lakes and projected prolonged rains. 162 Indians have been rescued, and more than 300 are still missing," a source close to the official confirmed to Izvestia.

How badly has Nepal's economy been affected

While rescuers are clearing the rubble, the government of the republic is trying to assess the scale of the economic damage, which threatens to set back the development of the state for years. According to the Ministry of Finance of Nepal, the preliminary damage from the disaster is already estimated at $4-5 billion, which is about 10% of GDP. For a country whose budget is traditionally in deficit, and whose economy has been trying for decades to get off the list of the least developed in the world, this amount looks catastrophic. It literally negates most modernization programs.

The impact of the disaster hit the basic sectors of the local economy. The hydropower industry has been critically affected. The destruction and flooding of the cascade of hydroelectric power plants led to the loss of a significant share of generation. This affects not only the household consumption of citizens, but also paralyzes the work of small industrial enterprises throughout the country, said Elsa Shirgazina.

Mining scrapping: How Nepal is coping with the effects of devastating floods

Protests may start in the country if the authorities do not take control of the situation, experts say.

No less damage was done to the transport system: bridges were washed away, high-altitude highways were destroyed, which completely blocked trade corridors with China. This caused supply disruptions, threatening shortages of essential goods and a spike in inflation.

The hardest blow has been inflicted on the agricultural sector, which employs a large part of the population. The loss of crops and livestock has deprived thousands of families of their livelihoods. To prevent food shortages, the authorities will be forced to increase imports, which will lead to the depletion of gold and foreign exchange reserves.

The tourism industry, Nepal's main source of foreign currency earnings, is also in deep crisis. The blocking of popular hiking routes and the risk of new landslides are forcing foreigners to cancel trips.

According to Elsa Shirgazina, instead of development, Nepal's state resources will have to be redirected to rebuilding housing and infrastructure, and paying compensation. The country will not be able to cope without large external loans, which will inevitably increase the national debt.

In total, the landslide affected more than 90 thousand people who are in dire need of humanitarian assistance, according to Reuters, citing data from the Red Cross. WHO representative Tarik Jasarevic added that due to the displacement of people, overcrowding, and shortages of water and sanitation, the risk of infectious diseases is increasing.

The disaster has become a serious challenge for the Balendra Shah government formed in March 2026. Although the new leadership still retains its credibility, social tension in society is extremely high. Experts warn that if the authorities show inefficiency in the distribution of humanitarian aid, allow abuses on the ground or delay the restoration of hydroelectric power plants and roads, a wave of public discontent in the future from six months to a year will inevitably result in mass protests and lead to a deep political crisis.