According to the Finance Minister, Namgay Tshering, the gross domestic product (GDP) for Bhutan is forecast to grow, and for a strong economy, macroeconomic parameters should be fixed.
GDP is the standard measure of the value added created through the production of goods and services in a country during a certain period. GDP is usually measured based on two calculations, which are income approach method and expenditure approach method.
According to the Lyonpo, Bhutan uses expenditure approach method and shared that for a better GDP, there is a need to pump in more investments and also has to adopt expansionary fiscal policy.
Finance Minister shared that in 2020, the country’s GDP fell to -10 during the pandemic.
“By global definition, we were in recession, during that period. From 2021, the GDP has increased to 3.7 percent because we have adopted an expansionary fiscal stance,” Lyonpo Namgay Tshering said.
Government spending contributes almost 37 percent to the GDP and lowering the government spending will mean low GDP, and with increase of cost, we are trying curtail, rationalize and optimize government spending, he added.
Globally, many economies, according to latest reports, show that all the advanced economies’ GDP have decreased significantly.
India and Bhutan’s GDP are parallel in nature, and go in the same trajectory, and in 2023, India’s GDP is projected to grow by 6.7 percent, and Bhutan is also projecting a growth by 5.3 percent, shared Lyonpo.
According to the Lyonpo, at this point of time, it is not GDP that we should be concerned, but the macroeconomic parameter and the fundamental issues.
“Currently, the critical issue is that we need to focus on fixing macroeconomic fundamentals and parameters, which is basically trade deficit. We need to fix anomalies in economic fundamentals if we are to have a strong economy,” Lyonpo pointed out.
“Whatever we invest, translates into imports, and we need adequate reserves to sustain it. To fix trade deficits, we need to rationalize our imports and our focus should be on it,” he added.