The country’s electricity sector is expected to grow by 19.8% this year, driven by the Punatsangchhu-II Hydropower Project. The construction of Small Hydropower Projects and new hydropower projects are also expected to add to the growth. However, the tourism sector is anticipated to bounce back to the pre-pandemic level only in 2027, affecting the growth target set under the 13th Five Year Plan. The overall unemployment rate has seen a decrease in this quarter, but youth employment rate remains high.
According to the finance ministry’s latest macroeconomic situation report, the total hydropower generation is expected to increase to 10,900.7 million units and reach 14,830.5 million units by the end of this year.
With the delay in the full commissioning of the PHPA-II, the export revenue is estimated to plummet to Nu 16.7bn as compared to the earlier estimates of Nu 19.4bn. This will bring the total revenue estimates to Nu 26.9bn in 2024. Likewise, the export revenue earning this year is set to decrease by 11.4% compared to the last quarter of 2023-2024 financial year due to rapidly growing domestic energy demand.
With the rising domestic energy demand, the share of domestic energy consumption from total generation will grow from 51% in 2023 to 71% in 2025, leaving only 29% available for export. As a result, the energy import bill is expected to rise significantly, even with the commissioning of PHPA-II in 2025.
In the tourism sector, government efforts to promote and attract tourists through marketing, improved access to regional gateways, and skill development programmes in the hospitality industry are expected to bring tourist arrivals back to pre-pandemic levels by 2027. However, the report suggests that this may impede the ambitious growth targets outlined in the 13th Five Year Plan for the overall economy.
The report emphasises that, given the current lack of economic diversity, it is crucial for the tourism sector to accelerate its recovery in order to support economic growth and create jobs.
In the labour market, the unemployment rate has decreased to 3.1 per cent. Despite this, youth unemployment remains high at 16.5 per cent.
The report states that programmes under the 13th Five Year Plan are expected to create more job opportunities.
The report underlines that realising the vision of a high-income economy will require enhancing the effectiveness of fiscal spending, increasing agricultural productivity, and diversifying the economy beyond hydropower and tourism.
Kinley Bidha
Edited by Kipchu
