GDP estimated to rebound to around 4% in 2021

Finance Minister Namgay Tshering says reviving tourism will take a little more time

Amid the Covid-19 pandemic, the Bhutanese economy recorded a growth of negative 10% in 2020, which is a 16% drop as compared to a growth of 5% in 2019, according to the National Accounts Statistics 2021 that was published recently.

However, the government to ensure โ€œSustained Economic Recovery for a Resilient Recoveryโ€ has underpinned five broad objectives, according to the Ministry of Finance (MoF).

The objectives include maintaining public confidence; sustaining economic activities; transforming health and education systems; leveraging on ICT and innovation; and enabling reforms initiatives.

For this, the government has accordingly allocated the highest capital budget allocation of Nu 38.3bn and recurrent budget of Nu 25.5bn in the FY 2021-22 to revive the economy.

This is besides the Phase II and Phase III of the Comprehensive National Response to the pandemic in the form of the Druk Gyalpoi Relief Kidu of income support and interest deferment and the fiscal and monetary measures, according to the MoF.

According to the MoF, the estimated GDP growth rate in the year 2020 was -6.3% but when the actual data were compiled, the GDP had actually contracted by -10.8% mainly due to contractions in the industry and service sectors.

MoFโ€™s Chief Planning Officer Chencho Tshering said that the government has estimated GDP to rebound to around 4% in the year 2021. This is also because of the comprehensive coverage of the vaccination programs.

โ€œHowever, as the Asian Development Bank projected, the economy will rebound this year,โ€ he said.

He added that the GDP rate is back to being stable like before but going by activities, the situation is much better than 2020. And the GDP for 2021 will be at around 3.7%.

As per the recent report published by the National Statistics Bureau, among the major economic sectors, the mining, quarrying, and construction were the main sectors that led to the slump. 

The fall in the GDP is also attributed to the service sector like hotels, restaurants, and recreational services dependent on the tourism sector which has been crippled by the pandemic.

Finance Minister Namgay Tshering said reviving tourism will take a little more time.

โ€œThe government will focus on mining, quarrying, and boulder export works have resumed, and likewise, manufacturing industries like in Pasakha are working like before. Besides the Kidu support from His Majesty, the government is looking to support sectors that will improve our economy,โ€ he added.

The minister said if there is no improvement in the GDP growth despite the impressive coverage of vaccination, then it is a sign that the government is failing.

Kinley Yonten from Thimphu