The Bhutanese Leading the way.
PM says 8 percent growth rate show policies bearing fruit
In 2013 when the government first came in and took over towards the end of July, Bhutan was reeling from the rupee crisis which was reflected in the 2.14 percent GDP growth rate for 2013.
However, in 2016 the economic growth has hit a high of 7.99 percent which shows a trend of continuous rise since 2013 and also points to a Bhutanese economy that has not only recovered from the 2013 crisis but is also doing well. The growth rate in 2014 was 5.75 percent, 6.60 percent in 2015 and now 7.99 percent in 2016.
The size of the economy increased to Nu. 148.678.93 bn in 2016 which is an increase of Nu 16.598 bn as compared to 2015. The per capita income also increased by 6.56 percent.
The Prime Minister said, “It all began in dealing with the rupee crisis that allowed economic activity to take off. We lifted import bans, ensured people could once again avail loans and at the same time enacted a national debt policy that limits debt, and while curbing spending in unnecessary areas we spent in productive areas.”
The PM said that the government was extremely cautious and disciplined in government spending like proposed government office buildings etc but spent in useful areas like agriculture and others.
“We are happy that our policies to strengthen and diversify the economy are bearing fruit and that the Bhutanese economy is growing in spite of a global economic slowdown and with the imminent completion of hydro projects it will only get better,” said the PM.
The PM pointed out that he was particularly happy that the main contributors to growth like for e.g. Agriculture was due to sheer domestic economic efforts and not just hydro related growth like in the past.
The PM said that agriculture in Bhutan is starting to grow after a long time and that growth would only get better given that kinds of investments that the government was making in this crucial field.
He said that there has also been an expansion in the service sector with tourism booming.
Lyonchhen said that high economic growth and the general expansion of the economy is also leading to the creation of jobs, and that is another good sign. The PM said that it will also continue to pour in better investment in quality education so that more youth can get employed.
The PM, however, said that in the nation’s long term development process it is still early days that that everybody has to work hard to realize His Majesty The King’s vision for Bhutan.
Lyonchhen said that the growth in various sectors along with overall growth indicated not only the success of the government’s economic policies but more importantly meant the civil servants, private sector and farmers are all working hard and contributing to the nation.
The PM predicted that the growth rate for 2017 would even be higher.
Economic Performance
Bhutan’s Gross Domestic Product (GDP) grew by 7.99 percent in 2016 up from 6.6 percent in the previous year.
The main drivers of growth were construction, transport and the communication sectors.
According to the office of the national account statistics sustained growth in government spending (Final Consumption), with 4.21 percent, and improved trade deficit helped economic growth in 2016.
With the country’s population projected at 768,577 in 2016 the GDP per capita in 2016 increased to Nu 193,447.02 (USD $ 2,879.07) from Nu 174,479.33 (USD $ 2,720.34) in 2015.
Likewise, the per capita Gross National Income (GNI) saw a growth of 7.02 percent compared to 2.69 percent in 2015.
The GNI per capita amounted to Nu 177,394.94 (US$ 2,640.17) in 2016 from Nu 159,023.80 (US $ 2,479.37) in 2015.
Among the major economic sectors, service sector recorded the highest growth at 10.48 percent as against 5.45 percent growth in 2015.
The performance of the Hotel and Restaurant sector is mainly contingent on the number of tourist arrivals in the country.
In 2016, the number of dollar paying tourist arrival in the country increased by 6.16 percent, up by 17.49 percentage points from a negative growth of 11.33 percent in 2015. With the increased inflow of the tourists, the sector recorded a growth of 9.90 percent in 2016. The sector made a contribution of 0.15 percentage points to the GDP growth.
Agriculture (crops) sector remains the main driver of the primary sector’s growth in 2016. The sector recorded growth of 6.54 percent.
In nominal terms, the Goss Value Added (GVA) was recorded at Nu 24.565 bn in 2016, as against Nu 22,111 bn in 2015.
Crops recorded a growth of 6.54 percent in 2016 compared to the 6.78 percent in 2015. The growth picked up in 2015 after a long period of sluggish growth.
Local cattle recorded a huge growth of 11.76 percent as against 4.73 percent growth in 2015.
Primary income received from abroad recorded a growth of 59.38 percent in 2016, as compared to negative growth of 23.12 percent in 2015. The Income paid to Rest of the World decelerated to 6.48 percent as against 27.89 percent in 2015.
As a result, Gross National Income (GNI) posted a growth of 8.65 percent.
In the secondary Sector Industry observed growth of 6.79 percent in 2016 a decrease from 8.22 percent in 2015. The share of the sector was recorded at 41.46 percent in 2016, from 41.35 percent in 2015.
Within the sector, the construction sector however, was the leading growth driver. This sector recorded a growth of 13.31 percent as compared to 10.60 percent in 2015.
The Service or tertiary Sector with a share of 42.02 percent to GDP recorded gross added value of Nu 28.422 bn, in 2016. The share of the sector increased by 0.11 percentage points from 41.91 percent in 2015.
Growth of the the sector accelerated to 10.48 percent in 2016 from 5.45 percent in the previous year. Transport and Finance sectors were the main contributors to the sector’s growth.
Wholesale and Retail Trade sector (Trade and Repair of Motor Vehicles, Motorcycle, Personal and Household Appliances) growth was 10.59 percent in 2016 from 12.72 percent in 2015.
The sector made a contribution of 0.87 percentage points to the GDP.
Within the sector, Wholesale and Retail Trade sub-sector recorded a growth of 11.01 percent as compared to 13.54 percent in 2015,downby 2.53 percentage points.
The Transport, Storage and Communication sector recorded 11.20 percent growth in 2016 from 8.80 percent in 2015, up by 2.40 percentage points.
The sector recorded GDP growth contribution of 1.12 percentage points in 2016.
Major growth contributions came from sub-sectors such as communication with growth of 18.72 percent and air transport with a growth of 63.38 percent in 2016.
Transport, Storage and Communication sector accounts for 9 percent of the GDP. Its Gross Value Added was recorded at Nu. 13.387 bn in 2016 compared to Nu. 11,883.73 million in 2015.
According to the national account statistics, GDP is measured both in current and constant prices.
The current base year for GDP estimate is 2000.
The current price estimates reflect the monetary value of all goods and services produced in the economy at prices prevailing in the year of reporting.
The constant price estimates reflect the volume measure (total units of goods and services) of all goods and services at the base year prices (constant price).
