…petroleum products and rice still top imports
At a time when commissioning of mega power projects is being deferred, correcting the trade deficit could remain an uphill task because many economic projections has already been made based on the earning from these projects
The country’s trade deficit, excluding trade in electricity, is estimated at around Nu 10B (billion) between January to March this year. Balance of trade with India alone accounts for more than Nu 8.3B of deficit.
A country experiences a trade deficit or negative trade balance if its import bill is more than its export earning.
This was as per the provisional trade statistics for the first quarter of 2017. Bhutan imported commodities worth of over Nu 17B, while its export value (including electricity) was recorded at around Nu 6.9B.
Import bill from India alone accounted for Nu 13.9B and the country export to India was valued at Nu 5.6B.
As for electricity, although exact import and export figures may be known only at the end of the year, the generation during the first three months of the year (January-March) is usually low. This is why the electricity export earned about Nu 549M in the first three months.
However, the country imported petroleum product worth more than Nu 2.3B in the same period leaving a serious deficit in energy trade.
Rice also forms a huge component of import making it to the top ten list with more than Nu 390M in first three months of the year.
Bhutan’s top export is silicon, which earned the country Nu 2.15B in the first quarter of 2017. This is followed by cement worth Nu 481.7M. However, industrialists are of the view that if counter veiling measures against the Indian GST are not put in place, Bhutan’s export would be seriously hit resulting in deterioration of trade balance.
Figures show that the government’s export promotion drive and import substitution did not so much result in improving the country’s trade balance, which began deteriorating since 2013.
The country experienced a trade deficit of Nu 32.10B in 2016 against Nu 32.80B in 2015. Had it not been for the electricity exports, the country could have felt a deficit of Nu 44.6B.
The slight improvement in trade deficit of Nu 32B last year could be attributed to the increased earnings from electricity export. Without electricity export worth Nu 13.03B, the country could have experienced a deficit of Nu 44.9B last year
Statistics over the last six years (2011 – 2016) show that the country’s imports have increased by almost 38%, while the increase in our exports struggled at less than one third of the import rate.
In 2016, the total imports were at Nu 67.40 billion while export was around Nu 35.30 billion. “Either we have become more consumerist or our production costs were so high,” an analyst said.
Electricity and hydropower remains the nucleus of the country’s trade balance.
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.