Kathmandu, September 30: Nepal has dropped 26 places to rank 111th among 163 countries in the 2026 Global Peace Index (GPI), reflecting a significant deterioration in the country’s peacefulness and raising concerns about political stability, institutional confidence and the investment climate.
The latest report published by the Institute for Economics and Peace (IEP) records Nepal’s peacefulness score at 2.143, representing a 9.1 percent deterioration from the previous year. Nepal experienced the largest decline in peacefulness among the countries assessed in the 2026 index, reaching its lowest ranking since the index was introduced in 2008.
The index evaluates 163 countries using 23 indicators across three broad dimensions: societal safety and security, ongoing domestic and international conflict, and militarisation.
Nepal’s decline was particularly pronounced in the ongoing conflict dimension, with deteriorating indicators relating to internal conflict, violent demonstrations and political instability. The report identifies the September 2025 unrest and its aftermath as significant factors behind the country’s declining peacefulness.
The deterioration comes after Nepal had gradually improved its peacefulness over the preceding decade, making the latest setback particularly significant for its political and economic outlook.
Declining Peacefulness and Investor Confidence
Beyond its implications for public security and governance, Nepal’s declining peace ranking raises questions about the confidence of domestic and foreign investors, particularly at a time when businesses are already facing uncertainty over policy consistency, political stability and the predictability of government decisions.
Although the Global Peace Index does not directly measure investor confidence, its findings provide an important indication of the broader institutional and security environment in which investment decisions are made.
Recent investment figures reinforce these concerns. Foreign direct investment (FDI) commitments to Nepal declined by 10 percent in the fiscal year ending mid-July 2026, falling to Rs 58 billion for 1,117 projects, according to figures reported from the Department of Industry.
However, actual FDI inflows increased during the same period, demonstrating that the decline in investment commitments should not be interpreted as a uniform contraction in all foreign investment activity.
Analysis: Peace, Predictability and the Investment Climate
The relationship between peace and investment extends beyond the absence of physical violence. Investors also consider whether a country can maintain predictable regulations, protect property rights, enforce contracts, ensure institutional continuity and provide a stable environment for long-term business operations.
Nepal’s declining peace ranking, combined with falling FDI commitments, highlights the importance of restoring confidence in public institutions and economic policymaking.
For investors considering long-term projects in hydropower, infrastructure, manufacturing and tourism, uncertainty surrounding political transitions, regulatory changes and social unrest can influence the timing and scale of investment decisions.
The challenge is therefore not simply to improve Nepal’s position in an international ranking, but to address the underlying conditions that shape confidence among citizens, businesses and investors.
The September 2025 unrest exposed longstanding concerns over governance, accountability, corruption and economic insecurity. Analysts have argued that rebuilding public trust requires stronger institutions, transparent decision-making and more effective delivery of public services.
Nepal’s 111th position in the Global Peace Index should consequently be viewed as an economic warning as well as a measure of declining peacefulness. While the ranking alone cannot establish that investor confidence has declined, the simultaneous deterioration in peacefulness and reduction in investment commitments underline the need for credible political stability, consistent economic policies and institutional reforms.
Ultimately, restoring investor confidence will depend not merely on political assurances but on whether Nepal can demonstrate sustained stability, policy predictability and reliable institutions capable of supporting long-term economic activity.
