Nu 5.4bn trade deficit in second quarter of 2021

Trade deficit at Nu 39.7bn in just nine months

The balance of trade with India alone accounts for around Nu 31bn

In just nine months this year, the country has imported goods worth more than Nu 63.5bn and exported goods valued at Nu 23.7bn, resulting in a trade deficit of about Nu 39.7bn.

Trade deficit is an economic measure of a negative balance of trade, meaning imports exceeding its exports.

As per the quarterly provisional trade statistics published by the finance ministry, the country’s trade balance for the first quarter was Nu 10bn in the red, Nu 5.4bn deficit in the second quarter and another deficit of Nu 24.4bn in the third quarter. Totaling the quarterly provisional balance of trade, the trade balance comes close to Nu 39.7bn in the red.

However, the wider trade deficit in the third quarter is because the country exported electricity worth Nu 19.2bn, compared to Nu 5.4bn in the second quarter and Nu 10.1bn in the first quarter.

Economic Affairs Minister Loknath Sharma said that the electricity generation increases with the onset of monsoon and the third quarter of the year falls between July and September.

“Other reason where the trade deficit has widened is because we have faced issues with boulder export in August-September,” Lyonpo said. 

Lyonpo said that the last quarter of the year is supposed to be the lean season for electricity production. Energy demand during these seasons is met through imports. So, the trade balance for the year is further bound to widen.

“Hydro-generation recorded a 12.7% decrease in the first eight months of 2021 compared to a corresponding time period last year. It will further widen now and we will have to import electricity from January,” Lyonpo said.

However, electricity export dropped in October-November this year by Nu 4.5bn worth, according to quarterly provisional trade statistics.

Meanwhile, the balance of trade with India alone accounts for around Nu 31bn and Nu 8.7bn from other countries.

A country, meanwhile, experiences a trade deficit or negative trade balance if its import bill is more than its earnings from export.

In 2019, the total imports were worth Nu 69.1bn and the export was around Nu 47.48bn. However, the trade balance decreased at Nu 18.8bn deficit last year, down from Nu 30bn in the previous two years.

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 third quarter this year, Bhutan imported commodities worth more than Nu 63.5bn, while its export value (including electricity) was recorded at around Nu 23.7bn.

Among the top import commodities, petroleum products such as diesel and petrol dominate in terms of value. Until September this year, the country imported about Nu 4.4bn worth of diesel and about Nu 1.3bn worth of petrol. 

The import of fuel is further aggravated by vehicle import, whose monetary value every quarter reached more than Nu 1bn, meaning that until September vehicle import touched about Nu 2.5bn.

The country also imported Nu 1.6bn worth of rice when efforts were put to achieve rice self-sufficiency. 

In terms of export, boulders emerged as the top export commodity in the third quarter of the year with more than Nu 1bn in value. However, it dropped to second position with Nu 1.8bn.

Bhutan’s top exports include silicon, which earned the country Nu 10.8bn in the second quarter this year, followed by boulder and cardamom worth Nu 1.8bn and Nu 1.1bn respectively. 

Figures show the country’s trade balance began deteriorating from 2013. But there is a slight improvement in the trade deficit which could be attributed to the increased earnings from electricity export. 

Meanwhile, the top imported goods are from India worth Nu 49.9bn, followed by Bangladesh, and export goods to India worth Nu 18.9bn, followed by China worth Nu 6.1bn in the third quarter of this year.

Kinley Yonten from Thimphu