The country’s Gross Domestic Product (GDP) growth rate slumped to an all-time low of -6.3 per cent last year. This is attributed to a decline in activities in the tourism, construction and manufacturing sectors amid the COVID-19 pandemic. However, the finance ministry expects the GDP growth rate to improve this year.
This is the second time the country’s GDP growth rate fell below zero in the last three decades. The last one was recorded in 1991 when it dropped to -0.4. GDP measures the total goods and services produced within a country during a given period of time. It is used to evaluate the health of a country’s economy. A negative GDP normally indicates unemployment, declining business revenues and consumer spending.
The country’s unemployment rate hit an all-time high of five per cent last year. The service sector’s contribution to the GDP also fell to about 40.6 per cent from 43.4 per cent in 2019 as the demand in the consumer-driven sectors like retail, accommodation and transport were affected.
The decline in the country’s GDP is also attributed to difficulties posed by the COVID-19 pandemic on the Indian economy last year. Meanwhile, according to the World Bank, the GDP in the South Asia region is expected to rebound faster compared to Bhutan. The World Bank is estimating 6.8 per cent growth in the GDP.
According to the report, Bhutan’s GDP growth will not grow as fast as the neighbouring countries
“India’s GDP growth rate has a direct impact on our economy,” said Kesang Deki, the Secretary of the Ministry of Finance. “But this time, even though India is fully open, our borders in terms of trade and in terms of people moving in, we have our own COVID restrictions because the government is prioritizing health over the economy,” she said. She added that improvement in the Indian economy, therefore, won’t directly impact the country’s GDP until the COVID clears up or the restrictions are eased.
However, since the majority of the eligible population are vaccinated and with higher capital investment, economic activities in the country are expected to pick up.
“In 2021, we are also estimating a growth of 3.7 per cent which is slightly lower than initially projected in our budget to incorporate because after that there has been like a setback in India with this delta variant,” said Thinlay Yandon, the Chief Programme Officer of the Finance Ministry.
This outlook, according to the Finance Ministry, remains uncertain. The recovery is in infancy and the pandemic is showing no sign of slowing down.
Edited by Sonam