Trade deficit reaches almost Nu 18B

The country’s trade deficit in the second quarter between April to June this year, including trade in electricity, is estimated to be around Nu 7.7B, of which balance of trade with India alone accounts for more than Nu 6.7B in the red.

The country experienced a trade deficit of Nu 10B in the first quarter of the year and trade with India account to Nu 9.5B of the total trade deficit. This takes the country’s total trade deficit to almost Nu 18B within the first six month of 2018.

A country experiences a trade deficit or negative trade balance if its import bill is more than its export earning.

According to the provisional trade statistics for the second quarter of 2018, Bhutan imported commodities worth more than Nu 17.5B, which is an increase from Nu 17.4B in the first quarter.

The country’s export value (including electricity) also experienced a meagre increase from around Nu 7.5B in the first quarter to Nu 7.6B in the second quarter.

Import, however hovered around more than Nu 17B in both the quarters, meaning that the country imported goods worth more than Nu 35B until June this year.

The deficit is narrowed due to electricity export. Had it not been for the electricity export, the country could have experienced a trade deficit of another Nu 10B in the second quarter alone.

Although exact import and export figures would be known only at the end of the year, electricity generation during the second quarter of the year was recorded at Nu 2B. In the first quarter, which is usually a low generation season (January-March), electricity earning was only Nu 341M.

The country also imported fuel worth more than Nu 2.3B in the first quarter, putting diesel and petrol as the two top most imported commodities. Diesel import increased from Nu 1.79B in the first quarter to Nu 1.95B in the second, which means that until June 2018, the country imported diesel worth Nu 3.74B.

Rice also forms a huge component of import making it to the top 10 list with more than Nu 400M in the first three months of the year. This too increased to Nu 429M in the second quarter, forming Nu 829M to date (in 2018).

Bhutan’s top exports include silicon, which earned the country Nu 2.9B in the first quarter and another Nu 3.5B in the second quarter.

Figures, however, show that the country’s trade balance began deteriorating since 2013.

The country experienced a trade deficit of Nu 32.10B in 2016 against Nu 32.80B in 2015. This slight improvement in trade deficit could be attributed to increased earnings from electricity export.

Statistics over the last six years (2011–2016) show that the country’s imports increased by almost 38 percent; increase in exports struggled at less than one third of the import rate.

In 2016, the total imports were worth Nu 67.40B and export was around Nu 35.30B.  However, last year, trade balance improved at Nu 29.7B deficit, down from Nu 32B in the previous two years.

This shows the dependence of the country’s economy on hydropower.

Tshering Dorji

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