The economy does not look good with growth hitting 3.03 percent in 2018 and credit slowing down significantly coupled with high Non Performing Loans.
The strains are showing with many private associations and companies approaching the government for help.
Some would say this is the typical boom and bust cycle for Bhutan’s economy with a slowdown due every five or six years.
However, it also shows the deep structural flaws in our economy.
Our economy is still heavily reliant on a few factors like government spending, construction, hydropower and also the external factor of what happens to our largest trading partner, which is India.
The banking liquidity crunch is not a cause of the slowdown but only a reflection of the flaws of the economy.
The Banking sector does not have much areas to lend to and so it plays it safe by over lending in a few sectors like housing or hotels, the latter of which is dangerously over exposed.
Banks must take the blame for going for safe profits but a fact is that their lack of liquidity also shows that while people take loans readily there is not enough productive economic activity going on for people and companies to deposit back money in the banks.
A big loop hole is the lack of growth in a high potential sector like commercial agriculture or niche agriculture which has the potential to help our farmers and youth.
On the tech side the jobs of the future can only be taken up by youths who are trained well and this is where the main focus must lie.
Tourism is an important source of revenue but it cannot become a second hydropower where we put all our eggs in another basket and suffer the consequences.
At the heart of our economic crisis is the inherent weakness of our private sector, and the inability to tap into the global supply and demand chain which has to change.
A strong economy begins with a strong and well educated workforce