Country Economic Review: Bhutan

Abstract

Bhutan’s Eighth Five-Year Plan is scheduled to end on 30 June 2002 and the Ninth Plan to begin on 1 July 2002. Real gross domestic product (GDP) is estimated to have grown at 6.7 percent per year during the Eighth Plan period, equal to the target and representing an impressive performance. Sector performance, however, has been mixed. Agriculture has grown at 4.3 percent per year, led mainly by forestry and livestock, with cash crop production relatively slow moving. The industry sector has grown at 7.1 percent a year, below the Plan target, especially the mining and manufacturing subsectors; but it has been buoyed by the performance of construction and, to a lesser extent, by electricity generation. With the Kurichu (60 megawatts [MW]) and Basochu (22 MW) hydropower plants coming on stream in the next few months, and the Tala plant (1,021 MW) scheduled possibly for 2006, hydropower development (with related electricity exports to India) has become the main engine of Bhutanese growth. The contribution of the services sector, which has grown at about 8 percent a year during the Eighth Plan, has been erratic, but has been underpinned by growth in transport and ommunications on the one hand, and in tourism on the other, although the latter has been somewhat depressed in recent months by the slowdown in the world economy.