2016年-世界发展银行全球_Bhutan_Economic_Update_December_2016_28页_957kb

Bhutan Economic Update - December 2016

Core Content

Bhutan's economy experienced steady recovery and growth in 2016, driven by large-scale hydropower investments, supportive fiscal and monetary policies, and improved agricultural output. The country maintained macroeconomic stability with low inflation, a stable real effective exchange rate, and sufficient international reserves to cover 9 months of projected imports. Despite these positives, Bhutan faces significant structural challenges, including large current account deficits, high public debt, an underdeveloped private sector, and high youth unemployment. The Royal Government of Bhutan is revising its Economic Development Policy (EDP) and preparing for the 12th Five-Year Plan (FYP), which will start in 2018.

Main Points

• Economic Growth:

  • Bhutan's GDP growth recovered from 2.1% in 2013 to 6.5% in 2015, and is projected to rise further to 11.7% in 2018.
  • Growth has been driven by hydropower projects, government consumption, and private investment.
  • Real GDP growth has slowed in recent years, with a deceleration from 11.7% in 2010 to 2.1% in 2013, but has since recovered.

• Poverty Reduction:

  • Extreme poverty dropped to 2% in 2012, measured by the $1.90/day international poverty line.
  • Poverty at the $3.10/day line fell from 29% in 2007 to 10.9% in 2015 and is projected to decrease further to 6.0% by 2018.
  • The bottom 40% of the population experienced growth in income and consumption similar to the overall average.

• Macroeconomic Stability:

  • Inflation remained below 5%, and the real effective exchange rate (REER) was stable.
  • International reserves increased, providing a buffer against external shocks.
  • The current account deficit was high, exceeding 25% of GDP, but mostly financed by Indian loans.

• Sectoral Contributions:

  • Agriculture's contribution to GDP growth has declined over the long term, from 31% in the 1990s to 13% in the early 2010s.
  • Industry and services have become the main growth drivers, with services leading the slowdown in 2012 and 2013.
  • Four subsectors—mining, wholesale and retail trade, hotels and restaurants, and financial and insurance—showed long-term high growth.

• External Sector:

  • Bhutan's current account deficit is among the highest in the world, at 29.5% of GDP in 2015.
  • Exports (goods and services) as a share of GDP were 44.5%, while imports were 71.5%, contributing to the deficit.
  • The economy is highly dependent on India, both for trade and investment, and is vulnerable to Indian economic conditions.

• Fiscal and Monetary Policies:

  • The fiscal stance was expansionary, with a budget deficit of up to 4.2% of GDP in 2016.
  • The government is working to improve the business climate through policy reforms, aiming to stimulate private sector growth and reduce unemployment.

• Economic Prospects:

  • Growth is expected to accelerate between 2016 and 2018, supported by hydropower projects and positive Indian economic conditions.
  • The country is projected to maintain macroeconomic stability, with inflation rates likely to remain low.
  • The expansion of the private sector is seen as crucial for diversifying the economy and reducing youth unemployment.

Key Figures and Tables

• Figure 0.1: Composition of GDP Growth – Supply Side

• Figure 0.2: Actual and Estimated Poverty Rates and GDP per Capita (PPP)

• Figure 0.3: Snapshot of Bhutan's Macroeconomic Development

• Figure 1.1: Small but Fast-Growing Bhutan Economy

• Figure 1.2: High Investment Is Associated with Current Account Deficit

• Figure 1.3: Real GDP Growth Decelerated until 2013

• Figure 1.4: Declining Agricultural Share Over Long Term

• Figure 1.5: Economic Structure Has Remained Almost Unchanged in the Past Several Years

• Figure 1.6: Low Contribution of Agriculture Over Long Term

• Figure 1.7: Services Drove Growth Slowdown in 2012 and 2013

• Figure 1.8: Four Subsectors Had Long-Term High Growth

• Figure 1.9: Increase in Imports Accompanied Increase in Investment

• Figure 1.10: Shrinking Investment and Imports

• Figure 1.11: Contribution of Private Consumption Increased

• Figure 1.12: Gross Fixed Capital Formation Led to Growth Fluctuations

• Figure 1.13: Positive Overall Balance

• Figure 1.14: International Reserves Kept Increasing

• Figure 1.15: Bhutan's and India's Inflation Rates Are Highly Correlated

• Figure 1.16: Inflation Rates Have Decelerated in Food and Nonfood Items

• Figure 1.17: Imported Goods Have Brought Price Stability

• Figure 1.18: Gradual Depreciation of Ngultrum Against U.S. Dollar

• Figure 1.19: Stable Real Effective Exchange Rate of Ngultrum

• Figure 1.20: Credit Growth (Year-on-Year Growth, %)

• Figure 1.21: Led by Trade and Commerce and Transport (Year-on-Year Growth, %)

• Figure 1.22: Expansionary Fiscal Stance (Percentage of GDP)

• Table 0.1: Macro Poverty Outlook Indicators (Annual Percentage Change)

• Table 1.1: Bhutan's Economy in the World (Low- and Middle-Income Countries)

• Table 1.2: Bhutan's Economy in South Asia

• Table 1.3: Real GDP Growth of South Asian Countries

• Table 1.4: Current Account Balance of South Asian Countries (Percentage of GDP)

• Table 1.5: Increase in Current Account Deficit Mainly Due to Goods Trade

• Table 1.6: Increase in Current Account Deficit in 2015 Mainly Due to Goods Imports

• Table 1.7: Inflation Rates of South Asian Countries (Percentage of CPI)

• Table 1.8: Budget Summary (Percentage of GDP)

• Table 1.9: Hydropower Projects: Planned and Under Construction

Summary of Strengths

• Steady Growth: Bhutan's GDP growth recovered from 2.1% in 2013 to 6.5% in 2015, and is projected to increase further.
• Macroeconomic Stability: Inflation remained low, exchange rates were stable, and international reserves provided a buffer.
• Policy Reforms: Continued reforms in tax, trade, and business regulations have supported structural progress.

Summary of Opportunities

• Hydropower Projects: Expected to continue driving growth through construction and electricity generation.
• Positive Indian Outlook: Bhutan's growth is likely to benefit from India's economic performance.
• Policy Flexibility: Macroeconomic stability allows for flexible fiscal and monetary policies to support economic activities.

Summary of Weaknesses

• Youth Unemployment: Exceeded 10% in 2015, despite overall economic growth.
• Concentrated Growth: Growth is still heavily driven by the public sector.
• High Public Debt: Debt as a percentage of GDP has remained high, with a peak of 103.2% in 2016.

Summary of Threats

• Excess Domestic Demand: Hydropower and credit growth could lead to overheating.
• Current Account Deficit: Requires careful management, especially with high reliance on Indian financing.
• Global Economic Slowdown: Could affect Bhutan through India and the tourism sector.

Conclusion

Bhutan's economy has shown resilience and growth, but it remains vulnerable to external shocks and structural imbalances. Continued investment in hydropower and policy reforms are key to sustaining growth and reducing poverty. The development of the private sector is essential for long-term economic diversification and employment generation, particularly for the youth. The country's economic outlook is positive, but it requires careful monitoring of macroeconomic indicators and strategic investment in human capital and infrastructure to ensure sustainable development.