Economy facing major blues as pandemic drags on

The recent report by NSB throws some bleak realities into Bhutan’s ailing economy

By Tandin Wangchuk

Bhutan’s economy, unlike any other global economy, has seen a downward spiral ever after the pandemic hit us towards the final end of 2019.

While almost all sectors, baring the agriculture and the livestock sector, saw some of the worst growth ever recorded in recent history.

The construction sector noted further negative growth of -20.64 percent in 2020 from a negative growth of -14.66 percent in 2019, this was a fall of 5.99 percentage points from the previous year.

However, according to National Statistical Bureau (NSB) despite the dip in the sector’s growth, the construction sector remains one of the key sectors of the economy. The sector’s contribution to the GDP growth was -2.39 percentage points, and in 2019 the sector contributed -2.11 percentage points to the growth.

The sector constituted 9.50 percent of the GDP in 2020, of which 5.89 percent was from the private and public corporations and 3.61 percent share was from the government.

The share of the sector dropped by 1.96 percentage points in 2020 from 11.46 percent recorded in 2019. The gross value added of the sector for the year 2020 was Nu. 16,301.90 million compared to the Nu. 20,465.42 million in 2019.

Similarly, the growth for the Mining and Quarrying sector had observed a record low of -81.84 percent in 2020 from 33.10 percent growth in 2019, which was a decrease of 114.94 percentage points.

Coal Mines, Limestone, Dolomite Mines, Stone Quarry, among other mines were the main contributors to the contraction of the sector.

The mining and quarrying sector share declined from 4.80 percent in 2019 to 1.20 percent to GDP in 2020, a drop by 3.61 percentage points. The GVA in current price was estimated at Nu. 2053.70 million in 2020.

Further, the Manufacturing sector recorded negative growth of 0.01 percent in 2019 and in 2020 it further registered a low growth of -20.76 percent. which is a fall of 20.76 percentage points as compared to the year 2019.

The performance of the Hotel and Restaurant sector also saw major ripples as it is mainly driven by the number of tourist arrivals in the country.

“The ongoing COVID-19 pandemic situation in 2020 impacted the number of international leisure visitors’ arrival (dollar paying) in the country. The arrival has dropped by 91.12 percent, and the total number of international visitors (leisure and international other visitors) dropped by 91.29 percent in 2020,” NSB states.

 Further, there was a similar drop in regional tourist arrival in 2020. With the substantial drop in the inflow of tourists, the sector’s growth contracted by a record low of -73.46 percent in 2020 from a growth of 11.65 percent in the previous year, down by 85.11 percentage points.

The sector contributed -1.47 percentage points to the GDP growth. As the sector contracted during the period, the size of the sector’s share to GDP stood at 0.83 percent in 2020, down by 1.78 percentage points as compared to 2.61 percent in the previous year.

The Transport and Communication sector also recorded -14.65 percent growth in 2020 from 13.20 percent in 2019, down by 27.85 percentage points. The sector recorded a GDP growth contribution of -1.86 percentage points in 2020.

A major contribution to the downfall in the growth of the sector was mainly from air transport (-90.03 percent), travel agencies (-89.39 percent), and land transport (-14.24 percent) among other sub-sectors.

Nonetheless, in the agriculture sector which didn’t see much impact, production of crops recorded a growth of 5.07 percent in 2020 as compared to 2.12 percent in 2019, which is an increase of 2.96 percentage points from the previous year.

Though the sector’s growth decelerated almost by 3 percent in 2019, while in 2020 the sector observed one of the highest growths in the past five years. The higher growth of the sector was as a result of the increase in production of crops, like paddy, buckwheat, wheat and barley, mustard, and cardamon among others.

The sector recorded a value addition of Nu. 18,661.26 million in 2020 compared to Nu. 15,918.43 million in 2019 and it accounts for 10.88 percent of GDP.

Similarly, in the livestock sector, the cattle population recorded a drop in its growth in 2020 as compared with 2019, however, the productivity of the sector has increased as indicated by the value of output.

However, among the livestock population, only the population of poultry recorded the increase with the growth of 6.46 percent as against 13.55 percent in 2019