The Economy
State of The Economy (2005-2010)
• Robust Growth - 8.9%
• Inflation - 6%
• GDP per capita:
- US$ 1,852 in 2009 up from US $ 1,290 in 2005
• High rate of capital formation – hydropower
investments
• Buoyant revenue growth
• Debt at Sustainable Levels
• Structural Change in the Economy
Assessment of Economic Performance
IFI’s and External Agencies
• Excellent ratings for macroeconomic
performance
Tenth Plan Targets
• Growth Target of 9% within reach
• Maintain fiscal deficit <6% of GDP
Economic Milestone Targets of
Bhutan Vision 2020
• Economic landscape transformed by
hydropower
• 3,000 MW Hydropower Capacity by
2020 comfortably overachieved
• Increasing tourism revenues by 150%
achieved (2008)
• Increasing horticulture exports by
300% achieved (2007)
Macroeconomic Perspective up to 2020
• 9% Growth up to 2020
GDP Projected Growth 2013-2019
16
14
12
10
8
6
4
2
0
2013
• 16.6 annual revenue growth
to 2020
2014
2015
2016
2017
2018
2019
Domestic Revenues Forecast 2013-2019
In Billion Ngultrum
70
60
50
40
30
20
10
0
2013
2014
2015
2016
2017
2018
2019
Economic Vulnerability
• Bhutan an LDC due to economic vulnerability and
weak human assets base
• Economic Vulnerability Index (EVI) in 2009 at 52.9%
• 24th most economically vulnerable LDC
• EVI indicators of population, size, remoteness, export
concentration, share of primary sector in economy
impact of natural disasters, agricultural and export
instability
0
Afghanistan
Angola
Bangladesh
Benin
Bhutan
Burkina Faso
Burundi
Cambodia
Central African Republic
Chad
Comoros
Dem. Rep. of the Congo
Djibouti
Equatorial Guinea
Eritrea
Ethiopia
Gambia
Guinea
Guinea-Bissau
Haiti
Kiribati
Lao PDR
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mozambique
Myanmar
Nepal
Niger
Rwanda
Samoa
Sao Tome and Principe
Senegal
Sierra Leone
Solomon Islands
Somalia
Sudan
Tanzania, United Rep.…
Timor-Leste
Togo
Tuvalu
Uganda
Vanuatu, Republic of
Yemen
Zambia
LDCs by their Economic Vulnerability Index (EVI)
90
CDP Triennial Review 2009
80
70
60
52.9
50
40
30
20
10
Economic Vulnerability
•
•
•
•
Geographical Constraints
High Development and Trading Costs
MDGs unit cost US$ 354 per capita a year to 2015
Low Rank of 161 among 183 economies for
Trading Across Borders Indicator
• Export costs: US$ 1,352 per container
• Import costs: US$ 2,665 per container
• Natural disasters
• Climate Change Impact on
Hydropower and Agriculture
Social Development
PROGRESS TOWARDS MDGS
• Bhutan likely early achiever for several targets
• Strong policy & institutional support, commitment &
effective integration with national planning framework
MAJOR CHALLENGE: MEETING MDGS WITH
GREATER EQUITY
 National level progress on MDG Targets often
mask significant disparities & gaps at local level
 Other Challenges:
- Last mile constraints and costs,
- Capacity issues,
- Women’s empowerment and
- Resource needs
MDG Success Stories and
Areas Needing Attention
Goal 1: Reduce Extreme Poverty and Hunger
• Poverty scaled down from 36.3% in 2000 to
31.7% in 2003 and 23.2% in 2007
• Tenth Plan MTR indicates high likelihood of
reducing poverty to 15% by 2013
• Reason for successful scaling back of poverty:
- Growth, pro-poor expenditures and effective
redistributive policies
Issues
 Relatively weaker growth in
sectors important for livelihoods
of the poor (Agriculture)
 Underdevelopment of the rural
economy
 Rural Accessibility still a major
constraint
 Increase in food poverty from
3.8% in 2003 to 5.9% 2007
Multi-dimensional Poverty in Bhutan
• Multidimensional Poverty Concept highly relevant
within the GNH framework
• Multidimensional Poverty Index (MPI) calculated on
basis of Bhutan specific indicators & appropriate
weights
• MPI (2010): 25.8% of Bhutanese are deemed to be MPI
poor and deprived in at least 4 of 13 indicators
National MPI based on Bhutan relevant indicators
Nutrition (WHO)
House
0.3
Child Mortality
0.2
Livestock
Food Security
0.1
Land
Enrolment 8y
0
Assets
Schooling 5y
Water
Cooking Fuel
Electricity
Total
Urban
Rural
Toilet MDG
Higher levels of MPI deprivation
pertain to:
• access to improved sanitation
• cooking fuel (wood, charcoal or
dung)
• schooling 5 yrs (proxy for literacy)
• electricity
Relatively Less MPI Deprivation in:
•
•
•
•
•
•
•
School Enrollment
Drinking Water
Child Mortality
Nutrition
Assets
Livestock
House
Income Poverty and MPI across districts
 Broad Correlation exists with a few notable deviations
Multidimensional Poverty
0.6
Income Poverty
0.5
0.4
0.3
0.2
0.1
Thimphu
Paro
Bumthang
Haa
Punakha
Sarpang
Chukha
Bhutan
Trashigang
Wangdue
P/Gatshel
T/Yangtse
S/Jongkhar
Trongsa
Mongar
Tsirang
Lhuentse
Zhemgang
Dagana
Samtse
Gasa
0
GOAL 2: ACHIEVE UNIVERSAL PRIMARY EDUCATION
On Track
• 94% Net Primary Enrollment
• 93.6% Primary School
Completion Rate
Concerns:
• Out of school children (11,565)
• Quality of education
• Withdrawal of school
feeding programmes
GOAL 3: PROMOTE GENDER EQUALITY AND
EMPOWERING WOMEN
Complete Gender Parity in Primary and Secondary
Education
 102 girls for 100 boys in primary schools
 103.5 girls for 100 boys in secondary schools
Concerns:
 Gender imbalance at tertiary education (60.8 to 100
and low female literacy levels
 Low level of female representation in national
parliament (13.8%) and local government (7%)
GOAL 4: REDUCE CHILD MORTALITY
 On Track with a 48% reduction in IMR to 47 per 1,000 live
births from 91 per 1000 live births
 On Track with a 53% reduction in Under-5 MR to 69 per
1,00 live births from 148 per 1000 live births
Concerns: While MDGs are
on track, Tenth Plan Targets
would be highly challenging
GOAL 5: IMPROVE
MATERNAL HEALTH
 On Track with a 64% reduction in
MMR to 200 per 100,000 live
births from 560 per 100,000 live
births
Concerns: Data issues: MMR still
high and linked to low birth
attendance (65%)
GOAL 6: COMBAT HIV/AIDS, MALARIA
AND OTHER DISEASES
 Successful rollback of Malaria
and TB incidence
 HIV/AIDS prevalence low but
high risk factors and rising
infection trends
Goal 7: Ensure Environmental
Sustainability
 High forest cover at 70.46%
with protected area at 51.3%
 On track for CO2 emissions –
negative emissions
 Pledge to maintain Carbon
neutral economy and minimize
carbon footprint
 Access to Improved
Sanitation at 96.4%.
Early achiever
 Access to Improved
Drinking Water
Source at 96%. Early
achiever.
Goal 8: A Global Partnership
for Development
Decent Employment
 Youth Unemployment still a major
concern with about 9.2%
unemployment among youths
ICT
 Teledensity: Fixed line increased from
2.4 telephones to 3.8 per 100 ppl
 Mobile subscribers: Increased from
5.96 mobiles to 56.7 per 100 ppl
 Internet: Increased from 0.008 to
13.6 per 100 ppl
Resource Challenges
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Resourcing MDGs and Other Development Activities
MDG Needs Assessment and Costing
US$ 1.5 Billion required between 2011-2015
Rising recurrent expenditures
Recent Mckinsey Study on financing health care in Bhutan
reflected that healthcare costs could go up by as much as 70%
over next 5 years
• ODA Inflows will still continue to be vital