Latest economic indicators reveal healthy savings rate, steady growth, and stable trade relations, despite concerns over inflation and public debt
The National Statistics Bureau (NSB) has released the latest economic indicators for Bhutan, revealing a stable financial landscape with several notable trends from the 4th quarter of 2023 to the 1st quarter of 2024.
Bhutan’s Gross Domestic Product (GDP) has reached Nu 227,813.72 million, unchanged from the previous period, signaling continued economic stability. The per capita GDP in USD has slightly increased to USD 3,833.03, equivalent to Nu 297,411.72 at the current exchange rate of 1 USD to Nu 78.60. The GDP growth rate has remained steady, with a slight increase of 0.71%, reaching 5.21% in the first quarter of 2024. This growth is largely driven by the agriculture sector, which contributes 14.67% to the GDP.
The savings rate remains stable at 23.59% of GDP, indicating a healthy level of savings. The investment rate has seen a slight increase to 55.78% of GDP, which is a positive sign for the country’s economic development.
Bhutan’s exports of goods and services have increased slightly to 25.79% of GDP, while imports have remained steady at 60.14% of GDP, indicating a continued reliance on imports. Exports have increased by 2.02%, amounting to Nu 9,405.32 million, while imports have risen by 4.90% to Nu 24,531.11 million. India remains Bhutan’s largest trading partner, accounting for 78.23% of the country’s total exports and 86.15% of its total imports. However, exports to India have decreased by 2.85% to Nu 7,181.58 million, while imports from India have increased by 1.94% to Nu 20,803.11 million.
Exports to third countries have seen a significant surge, growing by 21.73% to Nu 2,223.73 million, while imports from third countries have increased by 25.21% to Nu 3,728.01 million. The balance of trade deficit has grown to Nu 15,125.80 million in the first quarter of 2024, up from Nu 14,166.84 million in the previous quarter.
The inflation rate has increased slightly to 4.61%, up from 3.9% in the previous period, largely due to higher prices of imported goods and services. Foreign exchange reserves have increased, now standing at USD 533.29 million. The reserve position remains comfortable with USD 474.69 million and a Rupee equivalent of Nu 4,884.32 million.
The total public debt has increased by 4.7% to reach Nu 293,089.46 million in the first quarter of 2024. This is an increase of Nu 13,158.32 million compared to the previous year, where it stood at Nu 279,931.14 million. The total public debt now accounts for 109.8% of Bhutan’s GDP, up from 103.2% in the previous quarter. External debt has also increased by Nu 9,292.25 million, reaching Nu 261,122.84 million, making up 92.9% of Bhutan’s GDP.
Total electricity generation stood at approximately two billion units, a slight decline of about one percent compared to the previous quarter due to decreased hydroelectricity generation from projects such as Chhukha, Kurichu, THP, Basochu, DHPC, and MHP. The export of electricity to India remains stable, with approximately 31% of total electricity generated being exported, despite notable declines in exports from Chhukha THP and MHP projects.
Rural electrification initiatives have made significant progress, with over 4,426 villages electrified, although this represents a decline of about 12% compared to last year. Town electrification levels remain steady at approximately 42 towns. The number of electricity consumers remains steady as well, with over 243,385 households and businesses having access to electricity.
In a nutshell, Bhutan’s economic indicators continue to paint a picture of stability, with steady GDP growth and healthy levels of savings and investment. However, there are some concerns regarding the rising inflation rate and the increasing public debt. The country’s economic stability and growth are supported by the robust performance of the agriculture sector and substantial contributions from the hydropower industry.
Meanwhile, Bhutan maintains diplomatic relations with 55 countries, unchanged from last year, indicating stable international relations.
By Nidup Lhamo, Thimphu
