APFANEWS

Bhutan’s growth rate declines sharply

Published on Mar 27 2009 // Main News

Kathmandu, March 27, 2009: A new report by the United Nations has shown an amazing decline in the GDP growth rate of Bhutan compared to last year.

According to report ‘Economic and Social Survey of Asia and the Pacific 2009: Addressing triple threats to Development’ by Economic and Social Commission for Asia and the Pacific (ESCAP) made public Thursday, the GDP rate has slowed down to 5 perncent in 2008 compared to 21.4 percent in 2004. The report forecast 6.2 percent growin in the year 2009.

Completion of the Tala hydropower project in March 2007 provided a boost to economic growth, exports and government revenues. GDP growth, which peaked at 21.4 percent in 2007, returned to a more normal level of 5 percent in 2008, the report said. Work on three more hydropower projects will support economic growth in coming years. The tourism industry is also expected to do well.

On the other hand, the inflation rate increased to the record high. Compared to 5.2 percent in 2007, inflation was recorded at 9 percent in 2008.

The report said, India is the major trading partner of Bhutan and the country maintains a fixed exchange rate with the Indian rupee. Bhutan enjoyed a current account surplus in 2008.

Merchandise trade and current accounts moved into surplus in 2007 and 2008, aided by electricity exports to India from the Tala hydropower plant. Despite large revenues from the export of electricity, aid inflows will continue to be an important source of financial support, much of it coming from India.

Some of the indicators

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Real GDP growth rates 4.2 5.8 7.7 7.2 6.8 10.9 7.2 6.8 7.1 8.5 21.4 5.0
Gross domestic savings rates 23.5 22.9 22.5 23.3 40.9 39.7 39.1 36.0 27.7 37.4 37.2 50.0
Gross domestic investment rates 33.0 35.7 39.7 47.4 58.8 59.6 57.0 59.7 56.0 51.1 52.8 ..
Inflation rates 6.5 10.6 6.8 4.0 3.4 2.5 2.1 4.6 5.3 5.0 5.2 9.0
Budget balance

–2.3 0.9 – 1.7 –3.8 –10.6 –4.6 –9.8 1.8 –6.5 –0.8 0.5 ..
Current account balance 5.2 10.1 2.2 –9.0 –8.5 –15.8 –23.6 –17.9 –30.4 –4.3 11.3 ..
Change in money supply 58.9 13.9 32.0 17.4 7.9 26.9 1.8 19.9 11.9 13.0 13.0 ..
Merchandise export growth rates 1.7 12.1 –5.9 9.2 –12.9 4.5 8.7 39.7 34.5 47.2 64.4 29.6
Merchandise import growth rates 18.4 3.7 19.3 14.0 6.1 –5.2 2.2 29.2 75.5 –5.6 15.1 56.1
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