IMF has projected that GDP will grow at 8.4 percent this year

Economy: Prime Minister Tshering Tobgay has said that the government will not be able to achieve an annual economic growth of 10 percent by 2018 as promised during its election campaign in 2013.

The International Monetary Fund’s (IMF) World Economic Outlook has projected the country’s real GDP to grow at 8.4 percent this year. When he government came to power in 2013, the country’s GDP growth was 2.05 percent.

Speaking at the Meet-the-Press on July 7, the Prime Minister said IMF’s projection indicates that the economic fundamentals are good.

The Prime Minister cited two reasons for the government’s inability to achieve the target, one of which he said was delay in completion of hydropower projects, the main driver of economic growth. He said the completion deadline of both Punatsangchhu I and II will be deferred.

He said the Mangdechhu project will be completed by March 2018, while the Dagachhu project was  completed late too. “The hydropower projects won’t be completed as expected,” he said.

“Since the hydropower power projects are going to be delayed, Bhutan is not going to achieve an annual GDP growth rate of 10 percent (by 2018),” the Prime Minister said.

The second reason, the Prime Minister said was the bad state of economy in 2013. He said the economic situation in 2013 was “much worse” than what the people thought it was.

“Nobody knew that our economy that time was as bad as it was,” he said, adding that the GDP growth of 2.05 was one of the lowest in Bhutan’s modern history.

Nonetheless, he said the economy has picked up.

The Prime Minister is optimistic that the newly established Rural Enterprise Development Corporation (REDC) will propel economic growth through development of small industries. Also, he said development in agriculture and animal husbandry would lower imports and contribute to economic growth.

Between 1998 and 2007, the country’s economy has grown at an average rate of 7.7 percent. As per the IMF’s data, Bhutan experienced an all time high growth of 10.8 percent in 2008.

The country’s real GDP in 2021 is projected to drop to 7.5 percent. Bhutan is projected to be the fourth fastest growing economy in 2021. The baseline projection for global growth in 2016 is a modest 3.2 percent. The recovery is projected to strengthen in 2017 and beyond, driven primarily by emerging market and developing economies.

MB Subba