Asian development Bank (ADB) forecasts that economic growth in Bhutan will be -3.4% this fiscal year (FY) 2021 from 0.9% in FY 2020 on account of stringent pandemic containment measure, including two prolonged nationwide lockdowns that stifled economic activity across sectors, according to a new report by the ADB.
Finance Minister, Namgay Tshering said that ADB is taking into consideration the regional growth and they have done a simulation at the regional level trickling down to the context of Bhutan since the economy of Bhutan is largely trading based economy and more of import driven as well as some exports. He said because of COVID -19 the trade balance has improved to a certain extent.
Coming to the growth rate Ministry of Finance (MoF) has been updating the economic growth rate every quarter even though the significant shift was not seen every quarter. “Given the share size of Bhutan’s economy there will not be much difference and one thing we have to understand is that since COVID-19 came to Bhutan in March 2020 the economy of our country has come down because of the growth rate which comes from the service sector, and despite the global pandemic within the region and in India the impact of COVID on the tourism sector might remain the same unless the globe heals, “said Lyonpo.
“The simulation at the regional level and growth overall by the ADB is not a definite figure but at the same time given the share size of our economy, the volatility and the conditional opportunity that we enjoy at this time we were expecting that we will have a V shape growth. If India didn’t have to face such situations of COVID at the moment since 70% of our trading is with India, the growth in our country projected for the coming fiscal year could have been positive 6 or 7 % but looking at the situation ADB projects that the growth rate will be negative 3.4,” added Lyonpo.
Economic sectors are working on implementing the terms of reference for each sector taken care by the ministers responsible. MoF as directed by Lyonchhen will be submitting its recommendations to the government to ensure that the investments are made precisely.
Lyonchhen Dasho Dr Lotay Tshering said that by this time GDP growth rate would have touched 7 to 8% but due to the pandemic they could not meet their achievement as planned in the 12th 5-year plan.
Before pandemic the GDP rate of Bhutan was 5 and it has currently dropped to -6.
Lyonchhen said “Since GDP level has dropped the life style has not changed and we have not even felt the change other than the physical restrictions and mental stress about getting infected by COVID and the fear of another lock down. We all should have been in a difficult situation if GDP is a direct reflection of the standard of living,” said Lyonchhen.
Lyonchhen also said “Bhutan’s per capita income is almost 3,400 dollars and if the GDP has dropped drastically we all should have been in a very difficult state at the moment but we are not facing such difficulties.”
“If one could analyze it in depth this is the essence and beauty of GNH,” said Lyonchhen.
The bigger businesses are seeing severe downfall instead of making profit but for the rest of the population who are earning two to three hundred thousand a year they have not been affected at all added Lyonchhen.
“His Majesty has dispersed almost 12bn Ngultrum in a year to the hands of the Kidu recipients which is one reason the market has been able to stay afloat and since the individual consumption salary has been given by His Majesty during the pandemic, Bhutan’s economy has actually remained the same,” said Lyonchhen.
He said had it been in a well calculated economic scenario like Singapore every point drop in GDP would result in every individual being affected and in coming days if there won’t be any lock downs the GDP may rise to positive 3 or 4 and still there will be no impact on our lifestyle.
Lyonchhen said one lock down can bring a vast difference in GDP because of the small size of the economy, He said there are people complaining about the market price of the commodities on inflation rate and one should know that it is direct reflection of the cost price of inflation in India.
Lyonchhen’s major concern is that in coming days if the height of the pandemic hits India there will be disruption in goods and services.
“Livelihood concern for our country is as strong as the pandemic because there is no way we can control it and since we depend a lot on India it will directly hamper our country,” said Lyonchhen.