Latest figures show that commerce with third countries (other than India) has increased

RMA Report: The share of Bhutan’s exports to India dropped to 86.1 percent in 2013 from 93.9 percent in the previous year, while the share of exports to countries other than India (COTI) increased by 25.2 percent.

This is an indication that Bhutan is strengthening its trade relations with countries besides India, and that earnings in hard currency have increased.

While exports to COTI has increased, imports from COTI increased only by 8.3 percent, according to the annual Royal Monetary Authority (RMA) report released yesterday.  However, Bhutan’s current account deficit with COTI increased by 79.9 percent to Nu 2B last year.

Current account deficit occurs when the value of goods and services a country imports exceeds the value of goods and services it exports.

The share of exports to Bangladesh increased to seven percent from four percent in 2012.  Major exports to Bangladesh include oranges, cardamoms and limestone.  Bangladesh was followed by Germany among the top three destinations for exports, with its share increasing to 1.4 percent from 0.1 percent in 2012.  This was mainly due to the increase in export of ferro alloys.

Exports to India increased by 8.5 percent, compared to a six percent growth in imports.  In 2013, total bilateral trade reached Nu 72.6B, with Bhutan’s imports from India estimated at Nu 43.6B, and exports to India at Nu 28.979B.

Imports from India increased to 83.5 percent in 2013 from 79.4 percent in 2012.

Top exports to India include hydropower and ferro alloys.  Following India was China with a share of 2.1 percent.

Some of the major imports from China were doors, windows, hand tools and crushing and grinding machines.  Thailand’s share has increased from 1.4 to 2.1 percent, with major imports were being polythene and polymers.

Imports from South Korea decreased from 3.1 percent in 2012 (Nu 1.7B) to 0.6 percent in 2013 (Nu 280M).  This was mainly due to the decrease in import of copper wire.

During the last fiscal year, trade deficit increased by 2.3 percent from Nu.17.2B to Nu.17.6B.  This was attributed to the increases in the import for mineral products, diesel and petroleum, and base metal products.

The trade deficit with both India and COTI widened only marginally in the year, by 2.3 percent and less than 0.1 percent, respectively.  The overall trade deficit, however, increased by 1.8 percent in 2013.

Meanwhile, RMA governor Daw Tenzin, in his annual report message, has said it has been nearly three years since the authority of Bhutan had to take several unconventional measures to address pressures from growing external imbalances.

“These imbalances emanated from deep-rooted, underlying structural factors and manifested as a severe shortage of Indian rupees in the country,” he said. “While the last three years were an extremely challenging time for the economy, valuable lessons were also learnt.”

He said the contraction in Bhutan’s economic growth since 2011 has continued, with real GDP hitting an all-time low of 2.1 percent in 2013.  However, he added, a recovery process is expected to boost domestic production and productivity, increasing exports and diversification.

With the easing of pressure on the Indian rupee, lifting of most of the unconventional measures and, most importantly, recognition by the government of the need for reforms to address our structural constraints, the low economic performance of 2013 will be a bottoming out of the GDP with recovery on the horizon.

“As I’ve always pointed out, the policy imperative is to phase in targeted long-term policy measures to promote and boost domestic productivity and employment, to channel investments into productive sectors, diversify the economy and build the domestic supply and production base.”

MB Subba



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