Econ­omy grows seven per­cent over the years

Bhutan Times - - Front Page - Sonam Pen­jor

Over the past, the econ­omy grew an av­er­age growth rate of seven per­cent which was sup­ported by high in­vest­ments in hy­dropower sec­tor, in­creased elec­tric­ity ex­port earn­ing, ex­pan­sion in ser­vice in­dus­try par­tic­u­larly in tourism sec­tor and the pub­lic sec­tor.

In terms of sec­tor con­tri­bu­tion to over­all GDP, the Na­tional Bud­get, Fi­nan­cial Year, 2018- 19 states that in­dus­try sec­tor con­trib­uted 40 per­cent, fol­lowed by ser­vice sec­tor at 36 per­cent, and agri­cul­ture sec­tor with 19 per­cent. “Re­gional growth for South Asia has also been grow­ing at an av­er­age of seven per­cent.”

In terms of growth prospect, the re­port states that re­cent as­sess­ment by In­ter­na­tional Mon­e­tary Fund ( IMF) in its World Eco­nomic Out­let ( WEO) Oc­to­ber 2018 re­ports a pos­i­tive global growth out­look of 3.7 per­cent, same as 2017 level, despite ris­ing trade ten­sions and weaker out­look for some key emerg­ing mar­kets and de­vel­op­ing economies aris­ing from coun­try- spe­cific fac­tors, tighter fi­nan­cial con­di­tions, geopo­lit­i­cal ten­sions, and higher oil im­port bills.

While growth in the re­gion is pro­jected to in­crease, ex­ter­nal chal­lenges and tighter global liq­uid­ity could be cause of con­cern, stated the re­port.

Ac­cord­ing to the Asian Devel­op­ment out­look 2018, growth fore­cast for In­dia is main­tained at 7.4 per­cent on an av­er­age for 2018 and 2019 with ro­bust do­mes­tic de­mand and grow­ing ex­ports. How­ever, de­pre­ci­a­tion of ru­pee against US dol­lar, volatile ex­ter­nal fi­nan­cial mar­kets, ris­ing fu­els prices and un­cer­tain po­lit­i­cal en­vi­ron­ment are some of the risks that could ham­per growth.

These devel­op­ments could af­fect Bhutanese econ­omy though the ex­ter­nal sec­tor and ser­vice sec­tor. Cur­rent as­sess­ment of the base­line growth fore­cast in­di­cates mod­est growth of 5.4 per­cent in the medium term and 5.1 per­cent on an av­er­age for the 12th Five Year Plan ( FYP).

The re­port also states that slow­down in growth is pro­jected mainly on ac­count of shift­ing of com­mer­cial op­er­a­tion date of Pu­natshangchhu- I and II to the next plan be­sides the de­lay in com­mis­sion­ing of Mangdechhu hy­dro project (MHP) and Nikachhu HP.

“Higher growth of six per­cent and above could be achieved in the 12th FYP by ex­pe­dit­ing the com­mis­sion­ing of Pu­natshangchhu– II and start­ing the con­struc­tion of Sunkosh hy­dro power project within the plan pe­riod be­sides at­tract­ing

ad­di­tional For­eign Di­rect In­vest­ment ( FDI), pub­lic pri­vate part­ner­ship ( PPP) and im­ple­ment­ing ma­jor fis­cal re­forms such as GST and oth­ers,” stated the re­port.

The re­port fur­ther states that fu­ture growth is an­tic­i­pated from ser­vice sec­tor with an av­er­age growth of 8.2 per­cent driven by strong do­mes­tic de­mand and growth in fi­nan­cial ser­vices while the in­dus­try and agri­cul­ture sec­tors are pro­jected to grow at three per­cent on an av­er­age.

The re­port states that man­u­fac­tur­ing sec­tor is also pro­jected to con­trib­ute to growth based on its ac­tual per­for­mance in re­cent past.

In terms of sec­tors share in the 12th FYP, the re­port states that ser­vice sec­tor is pro­jected to lead with 48 per­cent, fol­lowed by in­dus­try at 41 per­cent, and agri­cul­ture at 11 per­cent.

Over the last two years, prices have re­mained stable as in­di­cated by slower in­crease in Con­sumer Price In­dex ( CPI). Over­all CPI, in­fla- tion in FY 2017- 18 was 3.6 per­cent, lower by 0.7 per­cent points com­pare to the pre­vi­ous fis­cal year, stated the re­port.

“In­crease in food prices by 6.5 per­cent and non- food prices by 1.8 per­cent con­trib­uted to the in­fla­tion in FY 201718. Im­port in­fla­tion re­mained higher than do­mes­tic in­fla­tion at 3.9 per­cent con­trib­uted by higher im­port food prices than non- food prices in FY 2017- 18.”

In com­par­i­son to pre­vi­ous fis­cal year, mar­ginal in­crease was noted for im­port in­fla­tion while the do­mes­tic in­fla­tion re­duced by two per­cent.

Based on re­cent monthly CPI data from the Na­tional Sta­tis­tics Bureau ( NSB), food prices are ex­pected to re­main higher than non­food prices. As the trend in food and com­mod­ity, prices in­di­cate are grad­ual rise along with the in­crease in fuel prices in the global mar­ket, CPI in­fla­tion in the coun­try is pro­jected to range within five to six per­cent in the medium term.

While, agri­cul­ture sec­tor con­tinue to be the ma­jor em­ploy­ment provider in the econ­omy em­ploy­ing about 57.2 per­cent of the labour force fol­lowed by ser­vice sec­tor with 34.2 per­cent and in­dus­try sec­tor em­ploy­ing only 8.7 per­cent. “Un­em­ploy­ment rate in 2016 was 2.1 per­cent which is an im­prove­ment of 0.4 per­cent points from 2015.” How­ever, youth un­em­ploy­ment in­creased to 13.2 per­cent in 2016, stated the re­port.

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