Export of electricity contributed Nu 13.03B
The government’s export promotion drive and import substitution did not so much result in improving the country’s trade balance, which began deteriorating since 2013.
The recent trade statistics show a trade deficit of Nu 32.10 billion (B) last year against Nu 32.80B in 2015. The slight improvement last year could be attributed to the increased earnings from electricity export.
Had it not been for the electricity export worth Nu 13.03B, the country could have experienced a deficit of Nu 44.9B last year. In 2015, trade deficit excluding electricity export was Nu 44.68B.
The country has imported goods valued at Nu 67.36B, of which around 82 percent (Nu 55.28B) was from India. Likewise, the country’s export earning was valued at Nu 35.25B, of which 90 percent came from India. This means the country’s balance of trade with India is Nu 23.23B in the red and Nu 8.89B in deficit with countries other than India.
A country experiences a trade deficit or negative trade balance if its import bill is more than its export earning.
While electricity is the largest export commodity the country produces, the hydropower loan repayment of close to Nu 3B annually has to be also financed from its earning.
Diesel is the top import item valued at Nu 5.77B. Petrol and diesel combined came to Nu 7.53B in fuel expenses last year alone.
Increasing import of fuel can be attributed to the swelling import of vehicles and spare parts worth Nu 6.94B.
Bhutan imported Nu 3.84B worth of vegetable products classified under the BTC code. In return, the country earned Nu 2.87B from the export of the same commodity, leaving a deficit of about 963 million (M).
Dairy products and meat also resulted in an outflow of about Nu 1.48B and 998M respectively. As usual rice is one of the top 10 imported tems valued at Nu 1.53B. Motor vehicle for transport of goods, dumpers designed for off-highway use and machineries with a 360-degree revolving superstructure, among others, are in the top-ten import commodities.
However, apart from electricity, the country’s largest export earning in absolute terms is ferro-silicon. Last year, export of ferro-silicon resulted in an earning of Nu 6.83B. Cement and cardamom helped bring in Nu 1.6B and Nu 1.34B respectively.
Calcium carbide, dolomite, silicon carbide and potatoes are listed as the country’s top-ten export commodity.
After India, the top countries from where Bhutan imported most goods are Thailand, China, Japan, South Korea and Singapore.
Electricity remains the nucleus of the country’s trade balance. At a time when commissioning of mega power projects is being deferred, correcting the trade deficit could remain an uphill task because many economic projections has already been made based on the earning from these projects.