Against a higher projection and the-so-claimed “robust performance”, the country’s economy recorded a growth of 4.63 percent in 2017, a decrease of 3.39 percentage points compared with that of 2016.
However, in absolute terms, the size of economy increased from Nu 149.15B in 2016 to Nu 164.62B in 2017.
In 2016, the country achieved 8 percent GDP growth and made it to the top three fastest growing economies in the world.
Both the International Monetary Fund and World Bank projected a higher growth to continue in 2017.
The World Bank revised the country’s economic growth projections from 9.9 percent to 6.8 percent in 2017. The 2018 growth projection was revised down from 11.7 percent to 7.7 percent. This is attributed to low progress and delay in the hydropower construction, demonetisation issue, and the introduction of goods and services tax (GST) in India. A one-year delay in the completion will reduce GDP growth rate by 3–4 percentage points, exports by USD 250–300M (about 50 percent of the current exports), and revenues from tax, dividend, and royalty by 0.5–1.0 percent of GDP.
The Economist also projected that Bhutan will be fastest growing economy in the world with a growth rate of 9.2 percent in 2017. The IMF’s outlook also projected Bhutan’s growth somewhere about 8 percent in 2017.
But the actual growth of 4.63 percent is lower than all the projection projections.
In the 11th Plan document that was drafted in the 10th Plan, GDP growth rate was projected to average 12 percent per annum. In 2013, the country’s GDP was estimated to grow by 7.07 percent but Bhutan experienced one of the lowest growth rates at around 2 percent.
The target in the 10th plan, which ended in June this year, was revised to 10 percent considering the delay in commissioning of hydropower projects. The country has achieved just a little over half of what was targeted.
According to the National Statistical Bureau (NSB), the growth rate of 4.63 percent was mainly due to poor performance of some of the important sectors like electricity.
Service sector recorded the highest growth at 7.15 percent followed by primary sector (Mainly comprising of agriculture) at 3.39 percent and industry sector recorded a growth of 2.41 percent.
Because in absolute terms the GDP increased, the GDP per capita was recorded at Nu 223,815 or USD 3,438, which is an increase of about four percent.
However, the growth to rebound this year on the back of Mangdechhu’s completion and it could continue to hit double digits should al the hydropower projects come on line as per the new deadline.
According to the World Bank, Bhutan achieved a growth rate of 28 percent in 1987, a year after Chhukha was commissioned. The country again achieved a staggering growth of 17 percent in 2007, a year after Tala was fully commissioned. In 2010, the country achieved a growth rate of about 11 percent and this was followed by subdued growth hitting 2 percent in 2013 and associated with rupee shortage and loan restriction.