Economy Overview: The Bhutanese economy is a mixed economy. There is considerable government interventions and regulations so that there is conducive environment for free market and capitalism to grow. The interventions include not just regulatory but also state participation in commercial ventures making up in the areas that lacks investment, either because of the scale of investment or market brevity. As of now, Bhutan is at verge of becoming ‘More Developed Country, given the steady growth over last four decades since planned development began.
The main source of revenue for the country is sale of hydropower to India. Till the onset of pandemic, tourism brought in the second most revenue into the country. Besides, hydropower, Bhutan exports agricultural & mineral produces from fruits to low grade coal and gypsum.
Gross Domestic Product (GDP): The Bhutanese economy recorded a growth of 4.09 percent in 2021, which is a 14.10 percentage points increase from a decline of -10.01 percent in 2020. The key sectors that contributed to the expansion of the economy were Mining & Quarrying at 28.27 percent, Transport & Communication at 16.21 percent, Construction at 8.78 percent, and Wholesale and Retail Trade at 7.26 percent. However, the Electricity & Water Supply sector, Financial & Insurance Activities, and Education & Health dropped by 3.69 percent, 4.16 percent, and 0.01 percent respectively.
On the demand side, the Government Final Consumption Expenditure (GFCE) posted a growth of 5.73 percentand Household Final Consumption Expenditure by 4.85 percent. The Gross Capital Formation (GFC) also recorded a growth of 12.60 percent against a drop of 15.99 percent in 2020. Further, the Export of Goods and Services increased by 8.92 percent and at the same time, the Import of Goods and Services increased by 15.74 percent in 2021.
The Gross National Income (GNI) recorded a growth of 4.10 percent in 2021, which is an increase of 11.24 percentage points compared to -7.13 percent in the previous year. The increase in GNI in 2021 was due to a decrease in the net outflow of primary income as compared to the previous year.
The primary income outflow to the Rest of the World (RoW) in 2021 was recorded at Nu 13,022.55 million as against Nu 12,427.29 million during the previous year. The net primary income from the RoW was recorded at Nu -11,507.87 million which is an increase in outflow of Nu 922.41 million over the previous year.
Per capita GDP and GNI: The GDP per capita in 2021 increased to Nu. 248,334.31 (US $ 3,358.59) from Nu. 230,054.91 (US $ 3,104.36) in 2021 and in real terms, it increased by 3.10 percent which is up by 13.98 percentage points compared to 2020.
The per capita Gross National Income (GNI) in 2021 recorded a growth of 3.11 percent compared to a -8.03 percent fall in 2020, increasing by 11.14 percentage points. In nominal terms, the GNI per capita in 2021 was recorded at Nu. 233,114.85 (US$ 3,152.76) as against Nu. 215,920.81 (US $ 2,913.64) in 2020.
The GDP deflator (implicit price deflator), which is the measure of price change for goods and services produced in the domestic economy, was recorded at 4.70 percent in 2021 as compared to 7.22 percent in 2020 which was a drop of 2.52 percentage points from the previous year.
On the other hand, annual price change (inflation) measured by Consumer Price Index (CPI) was recorded at 7.35 percent in 2021, which was an increase of 1.72 percentage points from 5.63 percent in 2020.
National Saving and Investment: The economy in 2021 noted a gross national savings of Nu 26,404.02 million against Nu. 28,822.37 million in 2020, which is a drop of Nu. 2,418.34 million. Of the total national savings, government savings was Nu. -6,321.28 million and private savings (Households, Private and Public Corporations) was Nu. 32,725.31 million.
The gross national savings recorded a drop of 6.14 percent in 2021 from the previous year. The increased Government Final Consumption Expenditure (GFCE), and continuous decline in the inflow of primary and secondary income from the Rest of the World resulted in the fall of the National Saving.
With the drop in national savings in 2021, like in the past years, the gross national savings was not adequate to meet the investment requirements of the economy. The nominal investment in 2021 was estimated at Nu 67,276.84 million as against the Gross National Saving of Nu. 26,404.02 million.
Table: Bhutan Economic Indicators (Source: National Statistical Bureau)