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Nu 10B trade deficit in the first quarter

The country’s trade deficit in the first quarter of this year, including trade in electricity, is estimated at around Nu 10B. Balance of trade with India alone accounts for more than Nu 9.5B in the red.

A country experiences a trade deficit or negative trade balance if its import bill is more than its export earning.

According to the provisional trade statistics for the first quarter of 2018, Bhutan imported commodities worth more than Nu 17.4B, while its export value (including electricity) was recorded at around Nu 7.5B.

Compared with the first quarter of 2017, trade deficit has remained more or less constant. A slight increase in import was followed with slight increase in export.

In the first quarter last year, import from India was worth Nu 13.9B while the export value was Nu 5.6B. Import bill from India in the first quarter this year accounted for Nu 15.2B and the country export to India was valued at Nu 5.7B. While the overall trade deficit in the first quarters of 2017 and 2018 hardly changed, figures reveal that trade deficit with India widened by about Nu 1B.

This could be largely due to the electricity export.

Although exact import and export figures may be known only at the end of the year, electricity generation during the first three months of the year (January-March) is usually low. This is why the electricity export earned about Nu 341M in the first three months of 2018. However, comparing with the first quarter of last year, electricity export also decreased by more than Nu 200M.

The country also imported fuel worth more than Nu 2.3B in the same period resulting a serious deficit in energy trade. Diesel and petrol are listed as the top ten import commodity, the former being the top import product, valued at Nu 1.79B.

Rice also forms a huge component of import making it to the top ten list with more than Nu 400M in first three months of the year, an increase from Nu 390M in the first quarter of 2017.

Bhutan’s top export include silicon, which earned the country Nu 2.9B in the first quarter this year, followed by boulder and cement worth Nu 393M and Nu 386M respectively.

The value of cement export decreased by more than Nu 95 compared with the first quarter of 2017. Industrialists attributed this to the Indian GST regime that hit the export market.

Figures show country’s trade balance began deteriorating since 2013.

The country experienced a trade deficit of Nu 32.10B in 2016 against Nu 32.80B in 2015. This slight improvement in trade deficit could be attributed to the increased earnings from electricity export.

Statistics over the last six years (2011–2016) show that the country’s imports increased by almost 38 percent; increase in exports struggled at less than one third of the import rate.

In 2016, the total imports were worth Nu 67.40 billion and export was around Nu 35.30 billion.  However, last year, trade balance improved at Nu 29.7B deficit, down from Nu 32B in the previous two years.

In 2017, Bhutan exported goods worth Nu 37.3B and imported Nu 67B. Had it not been for the electricity export, the country’s  export value in 2017 was Nu 25.3B, which could result in trade deficit of more than Nu 41B.

This shows the dependence of the country’s economy on electricity and hydropower. The country maintained current account deficit as high as 30 percent of gross domestic product during the last phase of construction of Tala hydropower. However, between 2007 and 2008, when Tala was commissioned, the country recorded surplus current account. Similar growth trajectory was witnessed when Chukha was commissioned.

Tshering Dorji

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