Country’s economy to grow at 5.7% in FY 2024-2025: World Bank report

The country’s economy is projected to grow at 5.7 per cent in the 2024-2025 financial year. This is according to the World Bank’s South Asia Development Update released on Tuesday. The World Bank attributes the projected growth to recovery in industrial activity outside the hydropower and services sectors.

According to the World Bank, Bhutan’s economy saw stronger growth than expected, last year. This largely reflects strong exports of electricity, and the re-opening of borders post the COVID-19 pandemic in late 2022.

The growth is also attributed to the government partially relaxing the tourism levy imposed on international visitors, although the number of arrivals is still well below pre-pandemic levels.

The country’s economy for the current financial year is expected to grow at 4.9 per cent, 0.9 percentage points higher than previous projections.

The projected growth is expected to be driven by higher electricity production, increasing mining and manufacturing output, and stronger tourism-related service activities after reducing the sustainable development fees on tourism.

The report also highlights key risks to the growth outlook, which include potential delays in hydropower projects, postponed efforts by the government to reduce fiscal deficits and public debt, and fluctuations in commodity prices due to geopolitical tensions.

Meanwhile, growth in the South Asian region is expected to be strong at six per cent in 2024, driven mainly by high growth in India and economic recoveries in Pakistan and Sri Lanka.

According to the report, South Asia is expected to remain the fastest-growing economy in the world for the next two years, with growth in the region projected to reach 6.1 per cent in 2025.

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