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Biblioteca Bhutan Development Update, April 2014

Bhutan Development Update, April 2014

Bhutan Development Update, April 2014

Resource information

Date of publication
Junho 2014
Resource Language
ISBN / Resource ID
oai:openknowledge.worldbank.org:10986/18656

After a policy-engineered slowdown in
2012, which saw GDP growth decline to 4.8 percent, the
lowest since 2008, Bhutan's economy is expected to
rebound to 6.5 percent this year, supported by hydropower
construction and higher electricity and food production,
following favorable rains. The tight fiscal stance
introduced in 2012 has been maintained to bring spending in
line with lower non-hydro revenues and a slowdown in foreign
grant disbursements, but the revenue situation is expected
to improve with the commissioning of cement and electricity
projects. Bhutan's external debt, at 85 percent of GDP,
remains high, but is likely to fall sharply as assured
hydropower revenues begin to flow from projects for which
the external loans were taken. However, its narrow exports
base and the large rupee-reserves mismatch make the country
vulnerable to shortfalls in external earnings and pose a
moderate risk. Bhutan's success in reducing absolute
poverty is noteworthy, with the poverty rate falling from 23
percent in 2007 to 12-13 percent in 2012, improving the lot
of the poorest segments of the population rather than merely
that of those clustered around the poverty line. A rapid
growth of commercial agriculture, expanding rural
infrastructure, and beneficial effects from the construction
of massive hydropower projects has established a sound
platform for further poverty reduction. However, continued
out-migration to urban areas and vulnerability of
infra-marginal groups, the relative absence of formal social
protection institutions, youth unemployment, and the
persistence of malnutrition, anemia and stunting point to
the need for continued effort at tackling non-income
poverty. The macroeconomic projections for 2014 set GDP
growth at 7.3 percent, stemming from new projects, increased
tourism receipts, easier credit conditions and the effects
of the Economic Stimulus Plan.

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