Service sector propels GDP growth to new heights in 2022

In a resounding testament to Bhutan’s ever-evolving economy, the service sector emerged as a mighty titan in 2022, contributing a remarkable 53.50% to the country’s Gross Domestic Product (GDP), equivalent to approximately Nu 14 billion (bn). This striking surge in contribution is a significant leap from the Nu 107 billion registered in the previous year, as per the National Accounts’ Statistics Report for 2023.

This unprecedented upswing in GDP growth can be primarily attributed to notable advancements in key service sector segments, including hotel and restaurant services, wholesale and retail trade, and information and communication.

Within the service sector, the hotel and restaurant industry emerged as a noteworthy driving force, contributing 0.27% to the GDP growth in 2022. In terms of current prices, the Gross Value Added (GVA) for this sector skyrocketed to about Nu 2.6bn, marking a significant increase from the Nu 1.9bn recorded in 2021.

The sector’s share in the national GDP also experienced a surge, accounting for 1.18% of the nation’s economic output. This represents a commendable growth rate of 0.22% compared to the previous year, signaling the sector’s robust expansion.

Another sector that experienced remarkable growth in 2022 was wholesale and retail trade. This encompassed the trade and repair of motor vehicles, motorcycles, and personal and household appliances. The sector’s growth accelerated from 8.36% in 2021 to an impressive 14.35% in 2022.

In addition, the information and communication sector displayed vigorous growth, boasting a 14.45% increase in 2022, following a substantial surge of 29.56% recorded in 2021. This sector contributed 0.65% to the overall GDP growth.

The growth of the information and communication sector was attributed to the thriving telecommunication sub-sector, which expanded by 14.61% and contributed significantly to GDP, accounting for 3.66%.

This sector encompasses diverse activities, including computer programming, consultancy and related services, telecommunication, as well as publishing, motion picture sound recording, and broadcasting.

While the service sector dazzled with its growth, the primary sector, encompassing agriculture, livestock, and forestry, faced a decline of -1.15%. This stark contrast with the 1.42% growth in the previous year was primarily due to a slump in the crop cultivation sector. Crop cultivation exhibited a negative growth rate of 4% in 2022, compared to a growth rate of 1.46% in 2021.

This sector contributed a value addition of approximately Nu 15.52 billion in 2022, slightly lower than the Nu 15.72bn recorded in 2021. It accounted for approximately 6.81% of the GDP, with the negative growth indicating potential challenges and changes within the crop cultivation landscape during that period.

In contrast, the secondary sector experienced a robust growth rate of 5.60% in 2022, marking a significant increase from the 3.94% growth observed in 2021.

The growth rate within the secondary sector was propelled by the manufacturing industry, which saw a growth rate of 6.73%. The metal and non-metallic mineral industries played pivotal roles in this growth, closely followed by the chemical and plastic product industries. This surge lifted the sector’s share of GDP to 8.73%, reflecting a 1.50% increase from its 7.22% share in 2021.

The construction sector also shone brightly, recording an impressive growth of 16.45% in 2022, compared to 7.07% in the previous year. This remarkable increase of 9.38% contributed 1.67% to the GDP growth, up from 0.70% in 2021.

The construction sector encompasses government construction, hydro construction, and private construction, including private and public corporations.

Bhutan’s GDP by production is categorized into three primary sectors: primary, secondary, and services, which also includes taxes on products.

The primary sector includes activities such as crop cultivation, livestock rearing, and forestry. The secondary sector encompasses mining and quarrying, manufacturing, construction, electricity supply, water supply, sewerage, and waste management activities. The services sector encompasses a diverse range of activities, including wholesale and retail trade and repairs, transport and storage, accommodation and food services, information and communication, financial and insurance activities, real estate activities, professional, administrative, and support services, public administration, education, human health and social work, arts, entertainment and recreation, other services, as well as taxes less subsidies on products, among others.

Bhutan’s economic landscape continues to evolve, with the service sector emerging as a key driver of growth and transformation in 2022. As the nation looks ahead, the dynamic interplay between these sectors will shape the trajectory of its economy in the years to come.

Sherab Dorji from Thimphu