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The country’s trade deficit in goods narrowed by about 38 percent to Nu 17.58 billion (B) last year, the central bank’s monthly statistical bulletin for March shows.

In an ideal situation, the trade deficit narrows when exports grow faster than imports. But exports of goods grew by 12 percent to Nu 47B while imports decreased by 9 percent to Nu 64B.

According to the statistics, the country recorded a surplus trade of more than Nu 7B in the first quarter of this year.

Most of the country’s exports take place during the first quarter of the year, according to the statistics. Major winter exports include oranges, doma (areca nut) and minerals.

Exports and imports stood at Nu 17.88B and Nu 10.625B in the first quarter of 2020.

The provisional trade statistics for the first half of 2020 indicate that the improvement in the trade deficit was not only due to the increase in exports but also due to restrictions at the international border with India, which remains closed since March 23 last year.

The increase in exports was driven mainly by the commissioning of the Mangdechhu project in June 2019.

The generation of electricity, which remained one of the reliable exports despite the pandemic, increased by more than 31 percent, according to the Druk Green Power Corporation. Accordingly, the total electricity export amounted to Nu 9,121M units worth more than Nu 27.042B last year.

The total trade volume decreased by 30 percent during the nine months since the start of the Covid-19 crisis. Non-hydro exports and imports reduced by 43 percent and 25 percent respectively after the Covid-19 crisis.

Among the top imports, petroleum products such as diesel and petrol dominate in terms of value.

However, officials say that the decrease in imports does not necessarily mean good for the overall health of the economy as such trends normally lead to a decrease in consumption.

Tengye (economic affairs minister) Lyonpo Loknath Sharma in an earlier interview said that a decrease in the imports of raw materials could lead to decreased production and export of goods. But he added that the decrease in the trade deficit was one of the positive aspects.

One of the 12th Plan goals is to reduce the reliance on imports and narrowing the country’s trade deficit. But the impacts of Covid-19 on firms that have limited ability to withstand shocks are likely to affect exports.

The manufacturing capacities of factories were significantly reduced during the lockdowns.

The manufacturing, construction and non-hydro exports suffered from trade disruptions, foreign labour shortage, and reduced external demand.

An official with one of the industries in Phuentsholing said the pandemic posed challenges in importing raw materials. But he added the situation had improved and that the import of raw materials had normalised.

Countries that Bhutan imported most of the goods from include India, Singapore, Germany, Thailand, Japan, the United Kingdom, the United Arab Emirates, Malaysia, Hong Kong, Denmark, Vietnam, the Netherlands, South Africa and the United States of America.

Top export destinations included Vietnam, Italy, Nepal, Turkey, the United Kingdom, the United States of America, the Netherlands, Belgium, Hong Kong, Thailand and Taiwan.

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