World Bank an­tic­i­pates higher GDP growth rate for Bhutan

Bhutan Times - - Editorial -

As the per World Bank re­port re­leased last week it has been fore­casted that South Asia is the fast grow­ing re­gion in the world while tak­ing ad­van­tage of the cheap oil to re­form in en­ergy pric­ing .

In­dia will def­i­nitely plan an im­por­tant role due to fa­vor­able oil prices; eco­nomic growth in South Asia is ex­pected to ac­cel­er­ate. The re­gion is among the great­est global ben­e­fi­cia­ries from cheap oil, as all coun­tries are the net oil im­porters. In the last quar­ter of 2014 South Asia was al­ready the fastest-grow­ing re­gion in the world, a World Bank re­port said.

Ac­cord­ing to the South Asia Eco­nomic Fo­cus re­port, re­gional growth is pro­jected to steadily in­crease from 7 per­cent in 2015 to 7.6 per­cent by 2017 through main­tain­ing strong con­sump­tion and in­creas­ing in­vest­ment. Given In­dia’s weight in re­gional Gross Do­mes­tic Prod­uct (GDP), the pro­jec­tions re­flect to a large ex­tent In­dia’s ex­pected growth ac­cel­er­a­tion, driven by busi­ness-ori­ented re­forms and im­proved in­vestor sen­ti­ment.

This will def­i­nitely have a greater ad­van­tage for Bhutan as most of the food prod­ucts in­clud­ing fos­sil fuel are im­ported from In­dia. Deficit in cur­rent bal­ance pay­ments and un­fa­vor­able bal­ance of pay­ment with In­dia has re­sulted in the slow growth of the econ­omy. Weak pri­vate sec­tor due to lack of fi­nance and aus­ter­ity mea­sures taken by the gov­ern­ment has fur­ther ag­grieved the sit­u­a­tion.

While World Bank has pro­jected a GDP growth rate of 6.7% for the fis­cal year 2015 and 5.9% for the year 2016 for Bhutan, the eco­nomic ac­tiv­ity is ex­pected to gain mo­men­tum mainly due to new hy­dro projects constructions and in­no­va­tion in tourism. Fur­ther as per the World Bank re­port the “Visit Bhutan 2015” ini­tia­tive taken to boast tourism will be a key el­e­ment in de­ter­min­ing the GDP growth rate.

How­ever chal­lenges like the low lit­er­acy rate, large ru­ral pop­u­la­tion, large in­for­mal eco­nomics and poor gov­er­nance are some of the chal­lenges Bhutan faces as per the WB re­port. Bhutan has man­aged to in­crease the size of its fi­nan­cial sec­tor over the past decade and has even man­aged to boost the tax ra­tios.

Fur­ther dur­ing the an­nual gen­eral meet­ing of the Bhutan Cham­ber and com­merce held last week, the gov­ern­ment has an­nounced var­i­ous mea­sures like the ease of do­ing busi­ness, pos­si­ble re­duc­tion in the power tar­iff and im­ple­men­ta­tion of the na­tional min­ing pol­icy with an in­crease in roy­alty rates in all min­er­als will def­i­nitely pro­vide a bet­ter growth of the econ­omy and achieve higher GDP growth rate than that of 2.05%.

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