The current projections for the country’s economic growth rate are estimated to be around 3.5-4% this year. These are being highlighted by government sources as signs of a remarkable recovery in the shape of a ‘V’.
The nation’s obsession with macroeconomic growth rates diverts attention from a serious discussion of other important macroeconomic trends.
As some economists have pointed out, all the deep drops in production are marked by a V-shaped recovery. As such, the shape of the recovery means nothing. Indeed, diving a little deeper, many economists have pointed out that the recovery is more in the shape of the letter, K.
The lower arm’s decline implies that the poor and middle-income people have done worse while the upper arm’s rise signifies that the rich and higher-income have become richer.
Moreover, the sizes of the two arms are vastly unequal. This unequal recovery is borne out by the latest Bhutan’s Gross Domestic Product (GDP) report 2021, amongst the major economic sectors, the tertiary (service) sector recorded the highest growth of 6.13% followed by the primary sector at 2.05% while the secondary (industry) sector recorded growth at 1.96% in 2021 compared to 2020.
As a share of the economy, the service sector had the highest share at 46.61% followed by the secondary sector at 34.20% and the primary sector with 19.19%.
Bhutan’s GDP increased to Nu 187.77bn in 2021 from Nu 172.30bn in 2020, an increase of Nu 15.48bn. The GDP recorded a growth of 4.09% in 2021 compared to a contraction of 10.01% in 2020.
Similarly, the Gross National Income (GNI) increased by 4.10%, an increase of 11.24 percentage points.
On the demand side, the Government Final Consumption Expenditure (GFCE) posted a growth of 5.73%, and Household Final Consumption Expenditure by 4.85% in 2021. The Gross Capital Formation/Investment increased by 12.60 from a contraction of 15.99% in 2020.
With a total population of 756,129 (Population Projection 2017–2047), the GDP per capita for 2021 was estimated at Nu. 248,334.31 (the US $ 3,358.59), an increase of Nu 18,279 (USD$ 254.23) from the previous year.
However, when the global economy itself is in crisis, we can’t judge and say our country’s economy is the best.
The real situation of the Bhutanese economy is much more forbidding if one considers the rising rate of inflation and the high rate of joblessness, especially amongst youth in the labour market.
Policymakers may have room or solutions to help maneuver the country out of this vicious economic recovery plan, but mistakes must be avoided and the GDP growth rate must be reviewed urgently.