Bhutan’s trade deficit hits a record high as goods imports surge in January-March
Bhutan’s trade deficit widened to a record high in March, reflecting a surge in imports as companies relied on foreign producers to meet solid domestic demand.
The gap in goods imports and exports trade grew Nu 3bn in the first quarter of this year as compared to the first quarter of last year. This is as per the Bhutan trade statistics report of the first quarter.
However, the report of this year’s first quarterly trade statistics revealed that the country imported goods worth more than Nu 23bn against the export of Nu 10bn, leaving a trade deficit of about Nu 13bn until March this year.
The widening of the trade deficit largely explains the economy’s worst performance since the pandemic recovery, with Gross Domestic Product shrinking to a -10% in 2020 annual pace.
The balance of trade with India alone accounts for around Nu 8.4bn, including electricity export.
A country, meanwhile, experiences a trade deficit or negative trade balance if its import bill is more than its earnings from export.
In 2021, Bhutan imported commodities worth more than Nu 19.3bn, while its export value (including electricity) was recorded at around Nu 9.32bn. However, the trade balance decreased to a Nu 10bn deficit last year.
Export prices rose 27.26% from the fourth quarter of 2020 to the fourth quarter of 2021 and import prices rose 18.05% during the same period. On average, export prices went up by 15.72% and import prices went up by 14.03% from 2020 to 2021.
In 2020, Bhutan exported goods worth Nu 48.25bn and imported worth Nu 66.63bn. Had it not been for the electricity export, the country’s export value in 2020 was Nu 20.73bn, which could result in a trade deficit of more than Nu 45.7bn.
According to the provisional trade statistics for the first quarter of this year, Bhutan imported commodities worth more than Nu 19.3bn, while its export value (including electricity) was recorded at around Nu 13.8bn.
Among the top import commodities, petroleum products such as diesel and petrol dominate in terms of value. Until March this year, the country imported about Nu 1.39bn worth of petroleum products.
In terms of export, containing by weight more than 55% of silicon emerged as the top export commodity in the first quarter of the year with more than Nu 5bn in value.
Bhutan’s top exports include silicon, which earned the country Nu 8mn in the first quarter of this year, followed by boulder and dolomite worth Nu 342mn and Nu 407mn respectively.
In addition, Bhutan exported goods of about Nu 2bn worth to countries other than India and imported around Nu 7bn worth in the first quarter of this year, widening the trade deficit of Nu 5bn.
Figures show the country’s trade balance began deteriorating in 2019. But there is a slight improvement in trade deficit which could be attributed to the increased earnings from electricity export.
Meanwhile, the top imported goods are from India worth Nu 16bn, followed by China, and export goods to China worth Nu 4bn, followed by Thailand worth Nu 852mn in the first quarter of this year.
Kinley Yonten from Thimphu