According to the World Bank’s projection, Bhutan’s Gross Domestic Product (GDP) growth will be between 2.2% to 2.9% by the end of the Fiscal Year 2020. The country’s economic growth projection before the pandemic was 6.5%.
Bhutan currently as Comprehensive National Response for COVID-19 has Nu 30bn as National Resilience Fund, deferred loan repayment and waived loan interest payment by three months. Moreover, the government will formulate plans to fast-track the implementation of the 12th FYP to stabilize the economy.
Other than Bhutan, all South Asian Countries are likely to record worst economic performance in 40 years.
In South Asia Economic Focus, Spring 2020, the World Bank report states that Bhutan anticipated a strong rebound last fall due to hydropower sectors. However, the severity of the lockdown in India is expected to affect Bhutan’s electricity export growth. 37% of total exports consist of electricity sold to India.
India’s economy, the biggest in the region is expected to grow only 1.5% to 2.8% in the fiscal year that started from April, down from an expected 4.8% to 5% from the year just ended.
With slow growth India’s Economy, the reports predicts reduction in external demand for non-hydro goods and services from Bhutan and have an effect on agriculture and construction sectors.
The reports that the region is likely to show economic growth of between 1.8% and 2.8% this year, down from the 6.3% projected six months ago. The growth is the worst in 4 decades.
The World Bank reported that in worst-case scenarios, the South Asian economy could shrink triggering a recession in some countries that will linger in 2021.
The report recommends temporary work programmes, debt reliefs and lifting restrictions on imports and exports of essential goods as economic relief.
The report also highlights governments need to ramp up action to curb health emergency especially for the most vulnerable.
Sangay Chezom
