GDP drops to negative 10% in 2020

Bhutan’s GDP dropped to Nu 171.57bn in 2020 from Nu 178.56bn in 2019

Amid the Covid-19 pandemic, the Bhutanese economy recorded a growth of negative 10% last year, which is a 16% drop as compared to a growth of 5% in 2019, according to the national accounts statistics 2021 released on Thursday.

According to the report, Bhutan’s Gross Domestic Product (GDP) dropped to Nu 171.57bn last year from Nu 178.56bn in 2019, which is a contraction of Nu 6.99bn. Similarly, the Gross National Income (GNI) of the economy contracted by 7.23%, a drop of 13%.

This means the flow of goods and services due to economic activities in major economic sectors has dropped at negative last year.

The GDP represents the flow of goods and services due to economic activities that take place in the economy. It is the sum of the values of all goods and services produced within the economic boundary of the country, which are available for final uses such as consumption, investment, and exports.

Among the major economic sectors, the industry sector recorded the highest drop at negative 13%, followed by the service sector at negative 11%, while the primary sector recorded a growth at 4.57% in 2020 compared to 2019.

The report states that as a share to the economy, the service sector had the highest share at 46%, followed by the secondary sector at 34%, and the primary sector with 19%.

Meanwhile, the key sectors that contributed to the contraction of the economy were Mining and Quarrying at negative 82%, followed by Hotels and Restaurants at negative 73.46%, Manufacturing, Construction, and Transport and Communication at -21%, -20%, and -14% respectively.

Further, Finance and Insurance; Wholesale and Retail Trade; and Other Business services have also contracted contributing to the overall contraction of the economy in 2020.

According to the report, the Government Final Consumption Expenditure (GFCE) posted a growth of 4%. However, Household Final Consumption Expenditure declined by negative 8%, along with Gross Capital Formation (GFC) at negative 14%; Export at negative 20%; and Import at negative 12.38% compared to 2019.

With a total population of 748,931 as per the Population Projection 2017–2047, the GDP per capita for 2020 was estimated at Nu 229,090.40 (US$ 3,129.86), which is a drop of Nu 11,665.26 (US$ 288.96) from the previous year.

In addition, the Gross National Income (GNI) recorded a growth of -7.23% in 2020, which is a drop of 12.92 percentage points compared to 2019. The decline in growth in GNI in 2020 was due to a higher outflow of primary income and also because of the drop in GDP.

The primary income outflow to the Rest of the World in 2020 was recorded at Nu 12,427.29mn as against Nu 1,841.83mn primary incomes received.

Therefore, the net primary income from the Rest of the World was recorded at Nu -10,585.46mn, thus leading to a drop in the GNI.

However, the GDP deflator (implicit price deflator), the measure of price change for goods and services produced in the domestic economy, was recorded at 6.85% in 2020 as compared to 0.90% in 2019, which was an increase of 5.95% from the previous year.

On the other hand, annual price change (inflation) measured by the Consumer Price Index (CPI) was recorded at 5.63% in 2020, which was an increase of 2.90% from 2.73% in 2019.

Kinley Yonten from Thimphu