…trade deficit widens by over 90 percent in the second quarter

Thukten Zangpo

Bhutan’s merchandise export fell in the second quarter (April-June) by about 4.5 percent to Nu 8.62 billion (B) compared with the first quarter, as reported by the finance ministry.

In the first quarter (January to March), export was recorded at Nu 9.03B.

Export to India, excluding electricity, declined from Nu 6.84B in the first quarter to Nu 6.17B in the second quarter. At the same time, export to countries other than India grew to Nu 2.45B from Nu 2.01B in the quarter.

Year-wise export projection (Hydro vs Non-hydro) Source: Budget report 2022-2023

With a fall in exports and a surge in imports in the quarter, the trade deficit (excluding electricity) widened by over 90 percent to Nu 27.27B. With the export of electricity worth Nu 6.04B in the quarter, the trade deficit narrowed to Nu 21.23B.

Import recorded a growth of over 50 percent with a value of Nu 35.89B in the second quarter from Nu 22.87B in the first three months this year.

Of the top ten commodities exported, the export of ferroalloys dropped to Nu 5.08B from Nu 5.6B in the first quarter. The quarter also saw the export value of dolomite decrease from Nu 728.4 million (M) in the first quarter to Nu 601.5M.

The export of cardamom improved by Nu 50M to Nu 407.39M in the second quarter. Boulder exports also saw an increase from Nu 342.21M to Nu 374.65M.

Pebbles, gravel, and broken or crushed stone saw a surge in export by over 40 percent to Nu 353.43M in the second quarter.

Improving the country’s export figure improves the country’s balance of payment. It also helps maintain the foreign currency reserves.

Last week, the finance ministry was asked by the Cabinet to enhance the export of commodities after a discussion with the economic affairs ministry as part of a plan to replenish the dwindling foreign currency reserves.

Both export and import figures increased by 18.9 percent and 35.8 percent respectively in 2021. The overall export value was near Nu 58.25B, and the imports value at around Nu 90.32B in 2021.

Merchandise exports increased by 65.2 percent in 2021.

Merchandise imports from India also bounced back, recording an increase of 39.2 percent in 2021 due to a pick-up in public investment projects and hydropower construction, according to the budget report 2022-23.

The trade is expected to rise over the medium term owing to the recovery in the demand coupled with the revival in domestic activities.

Overall exports and imports are estimated to increase by 25.7 percent and 30.7 percent respectively by the end of 2022 from the pre-pandemic level.