Bhutan growth rate to decline, but still ahead in SA (Economy)

Kathmandu, September 16: Asian Development Bank (ADB) projected a sharp decline in the Gross Domestic Product (GDP) growth rate for Bhutan in the year 2009 – down from 14.4 in 2008 to 7.2 percent.

However, the growth rate is second highest in the South Asia, after Afghanistan where ADB expects the growth rate of 8.3 percent.

An update publication of the Asian Development Outlook 2008, states Bhutan will achieve a growth rate of 14.4 percent in 2008.

In the fiscal 2007 (ended June 2007), GDP growth rose to 17.0 percent, pulled up largely by the start of operations at the 1,020-megawatt Tala hydropower plant. As full output from Tala has come on line as expected, the growth outlook of 14.4 percent in  fiscal year 2008 and 7.2 percent in 2009 is maintained.

The consumer price index increased to 8.9 percent (year on year) in the April–June quarter of 2008. Given the parity peg between the currencies of Bhutan and India, price movements are very similar, and in view of what is happening in India, Bhutan’s inflation forecast is now revised upward to 10 percent this year and 7 percent next year.

With Tala’s hydropower exports to India, the current account balance switched from deficit into a large surplus amounting to 10.5 percent of GDP in 2007. ADB projects the surplus for 2009 at 4 percent.

Developing Asian economies will revert to a more moderate growth outlook of 7.5 percent this year and 7.2 percent next year after posting its fastest growth of 9 percent in nearly two decades in 2007, the report says. Bhutan News Service