Weather and Natural Disasters

Nepal quake's economic damage among worst in decade

The earthquake that flattened entire villages in Nepal over the weekend and killed at least 3,600 people is expected to inflict about $5 billion in total economic costs on the small South Asian country.

That's more than 20 percent of Nepal's gross domestic product, putting the 7.8-magnitude earthquake among the most expensive earthquakes in recent history relative to a country's economic size.

And it could be much worse – according to the most recent estimates by the U.S. Geological Survey, there is a 42 percent chance that the costs will exceed $10 billion, and the total economic losses may eventually exceed Nepal's GDP of $19.3 billion.

Nepal exists in one of the "most seismically hazardous regions on Earth," where two colliding continental plates formed the Himalayan mountain range and periodically unleash devastating earthquakes that have killed or displaced millions, according to the Geological Survey.

Earthquakes wreak more havoc in countries like Nepal, which tend to have relaxed building standards. The county's economy is among the smallest in the world, with one in four citizens living below the poverty line and more than 70 percent working in agriculture.

The earthquake could also be devastating for the country's travel and tourism sector, which employs 3.5 percent of Nepal's workers. This natural disaster could put a damper on an economy that is already lagging behind its neighbors in economic growth.