Asian Development Bank: Bhutan Among Fastest Growing Economies In Asia
In 2018, Bhutan’s GDP is projected to grow by 7.1 percent, the second highest growth after India (7.3 percent).
By Tshering Dorji | Kuensel
With an economic growth rate of 7.5 percent in 2017, Bhutan is the fastest growing economy in the developing Asian region, according to the Asian Development Bank (ADB).
The bank’s Asian Development Outlook 2018 states that the economic forecast sees continued, strong and stable growth in Bhutan. However, the delayed completion of two large hydropower plants has postponed a sharp upturn that was forecast earlier.
Source: Tourism Council of Bhutan
This means that the country is likely to experience a similar growth projection for the next two years. In 2018, the country’s GDP is projected to grow by 7.1 percent, the second highest growth after India (7.3 percent).
The Indian economy is expected be the fastest growing economy in 2019 with a projected 7.6 percent followed by Bhutan with 7.4 percent.
Unemployment of youth is an issue of concern in Bhutan
However, ADB observed that despite sustained economic progress, youth unemployment remains an issue of concern.
“Although Bhutan has enjoyed remarkable economic progress, growth has not brought commensurate job creation for new entrants into the labour force,” the report stated.
Besides the clichéd mismatch between skills and job demand and preference for office jobs over manual labour, there is still limited absorption capacity in the job market in the public sector.
Family support granted to young people while they are unemployed and the lack of motivation to pursue financial independence are cited as factors contributing to youth unemployment.
Cottage and small industries help to create employment for youth
On a brighter note, cottage and small industries (CSIs) employ on average almost five workers per enterprise. In 2017, such enterprises employed 92,322 workers, or over 26 percent of the labour force. The government has identified the CSI sector a potential area for generating youth employment opportunities.
Growth forecast for other sectors in Bhutan
Despite challenges, the service sector is expected to be the main driver of the economy as wholesale and retail businesses and tourism continue to expand.
The growth in the industrial sector is forecast to be moderate because the final stages of construction will slow down at the two large hydropower plants, Punatsangchhu I and II.
Moreover, industry growth will strengthen slightly in 2019 because of the expected commissioning of the Mangdechhu Hydropower Plant in September 2018, which will bolster electricity production and exports.
Agriculture, which is relatively a small sector, is expected to grow faster in 2018 than last year based on the assumption of normal weather and government efforts to introduce new crops.
The improvement in productivity and the channelling of additional credit to agriculture are part of the government’s agenda for financial inclusion, the ADB report states.
In addition, various reforms that are being undertaken to foster CSI start-ups through improved access to finance, programmes and institutions are also expected to bear results in the coming years.
This article first appeared in Kuensel and has been edited for the Bhutan Times.