The Gross Domestic Product (GDP) growth rate dropped to an all-time low of -10.08 percent in 2020 from 5.76 percent in 2019, according to the State of the Nation report.
It stated that the measures the government adopted to safeguard from the pandemic impacted the economy severely.
“The Gross National Income (GNI) also dropped to -7.23 percent in 2020, which is a drop by more than 12 percentage points from the previous year,” according to the report.
“The Covid-19 containment measures that included the closure of international borders impacted the revenue sectors heavily.”
The key sectors that contributed to the contraction of the economy were mining and quarrying by -81.84 percent, hotel and restaurants by -73.46 percent, manufacturing, construction, and transport and communication by -20.76 percent, -20.64 percent, and -14.65 percent respectively.
Further, finance and insurance, wholesale and retail trade, and other business services have also contracted, contributing to the overall decline of the economy in 2020.
“On the expenditure side, the government’s final consumption expenditure saw a positive growth of 4.10 percent whereas the household final consumption expenditure declined by 7.95 percent.
However, the Druk Gyalpo’s Relief Kidu in the form of income and interest payment support to affected individuals, along with fiscal and monetary measures, effectively mitigated the adverse impact to a large extent.
The real economic loss ascertained for 2020 was Nu 7.3 billion, and without the NRF support, it would have been much higher at Nu 10.5 billion.
The supply chain disruptions and increasing commodity prices have contributed to high food inflation.
The report stated that while the lockdowns and stringent containment measures of driver switching between high- and low- risk areas have aggravated inflation, the fixation with the INR renders the government helpless in controlling prices of essential commodities.
Soaring prices have been observed for common household goods like vegetables, oil and hydrogenated fat products, eggs, and milk. In addition, the hike in fuel prices, house rent, utilities and unfair market practices have adversely affected the purchasing capacity of many households.
The annual price change (inflation) measured by the Consumer Price Index (CPI) was recorded at 5.63 percent in 2020. In February 2021, inflation peaked at 9.5 percent before falling to 5.3 percent in August.
The total public debt stock stood at Nu 240,897.795 million as of September 30, 2021. It comprises an external debt stock of Nu 219,823.359 million and a domestic debt stock of Nu 21,074.437 million.
It has increased by one percent, compared to 30 June 2021. The increase is a result of a rise in T-Bills stocks by Nu 4,000 million.
However, the external debt decreased by Nu 1,501.083 million (-0.7 percent) mainly due to the Mangdechhu Hydropower Project Authority repayment.
The domestic debt stock increased by Nu 4,000 million (23.4 percent), compared to what it was until June 30, 2021. The increase was due to the additional issuance of T-bills for cash management purposes during the quarter.
While the external debt to GDP remains elevated at 116.2 percent of GDP as of 30 September
2021, the risk of debt distress is considered low or moderate, since a major portion (73.4 percent) of external debt is due to loans availed for ongoing mega hydropower projects.
The Ministry of Foreign Affairs is continuously expanding its mandates, from offering consular services to facilitating trade and transit.
Embassies, missions, and consulates (EMCs) are already working towards enhancing trade and economy, and are exploring investment opportunities and promotion avenues for Bhutanese products.
“Our embassies are discussing free trade and preferential trade agreements with our partner countries,” the report stated. “They are exploring market viability for Bhutanese products and seeking dedicated space for Bhutanese products in superstores abroad.”
The tourist arrival dropped by 91 percent in 2020.
Out of 29,812 arrivals in 2020, the number of tourists paying the minimum daily package rate (MDPR) was 6,376, a drop of 90.5 percent from 72,199 in 2019.
The remaining 23,436 visitors were non-MDPR paying tourists, a 90 percent drop from the 2019 arrivals of 219,195.
The visa cancellations for leisure tourists increased from 1,004 in 2019 to 3,122 in 2020.
In 2020, the total trip expenditure made by tourists during their stay in Bhutan including MDPR and other additional expenses fell by 93 percent. Direct revenue or the sustainable development fee also declined by 88 percent from USD 23.42 million in 2019 to USD 2.76 million in 2020.
A huge number of employees in the tourism industry became unemployed due to the Covid-19 pandemic.