… GDP growth projected at 4.63 percent next year

Thukten Zangpo 

Bhutan’s economy is expected to grow stronger next year with stronger growth in the Indian economy.  The country’s economy is seeing a progressive growth, Finance Minister Namgay Tshering said.

“Bhutan and India’s economies follow the same growth trajectory because of the currency pegged and India being the major trading partner,” he said, adding that the Indian economy is going to be strong.

According to the finance ministry’s report as of June this year, Bhutan’s economic growth rate measured in the gross domestic product (GDP) is projected at 4.95 percent in 2022 and downgraded to 4.63 percent in 2023.

The country recorded a GDP growth of 4.09 percent after it slumped to -10.08 percent in 2020 because of the pandemic.

The growth projection was for agriculture, livestock and forestry sectors, seeing a growth of 2.05 percent in 2021 to 2.18 percent in 2022 to 3.23 percent in 2023.

Similarly, the services sector would see a growth of 8.08 percent in 2023 from 5.42 percent in 2022.

However, the indu

strial sector will see a decline to -0.15 percent in 2023 from 4.37 growth in 2022.

Presenting the State of the Nation, Lyonchhen Dr Lotay Tshering said that the country’s GDP is better compared with many other countries. “If we can maintain Bhutan’s GDP above 4.5 percent next year, we can come out from the economic downturn caused by the pandemic.”

Lyonpo Namgay Tshering said that the International Monetary Fund has projected the economic growth prospects for the developed countries and fast-developing countries. “It will not be good in 2023 and 2024 as compared to this year and will pick up only from 2025.”

He added that Bhutan couldn’t improvise its economy to perform much better than any other country. “We are prone to economic shocks as a heavily import-dependent country.”

However, Lyonpo said that Bhutan could follow and learn from other countries whether there is a need to curtail the government’s spending or spend more.

The World Bank has revised India’s GDP growth estimate to 6.9 percent for the fiscal year 2022-23 from 6.5 percent earlier.

India’s GDP for the July to September period this year grew at 6.3 percent against 8.4 percent in the same period a year ago.

Despite the impact of a tightening global monetary policy cycle, slowing global growth and elevated commodity prices, the World Bank expects India to see strong growth and remain one of the fastest-growing major economies in the world due to robust domestic demand.

“India’s economy is relatively insulated from global spillovers compared to other emerging markets. This is partly because India has a large domestic market and is relatively less exposed to international trade flows,” it added.

Similarly, the Asian Development Bank’s (ADB) outlook as of December kept India’s GDP unchanged at 7 percent for this fiscal year 2022-23. For the fiscal year 2023-24, the GDP growth has been unchanged at 7.2 percent.

For Bhutan, the ADB stated that agriculture is set to expand on better weather, and construction is expected to ensure growth in the industry.

However, it added that the service growth would be lower than earlier expected, a tripling of the sustainable development fee, a daily tariff for visitors, to USD 200 per head in June this year.

“This could dampen service growth in 2023 as effects spin-off on other businesses dependent on tourism,” the ADB stated.

The ADB revised and downgraded the South Asian countries’ GDP to 6.3 percent from 6.5 percent following a shutdown in Bangladesh and flooding in Pakistan.

For developing Asia, GDP is revised down to 4.2 percent from 4.3 percent in 2022 and to 4.6 percent from 4.9 percent in 2023 because of recurrent lockdowns in China, the Russia-Ukraine conflict and slowing global growth.