Bhutan, in the year 2022, celebrated an upswing in its Gross Domestic Product (GDP) and Gross National Income (GNI), recording impressive growth rates of 5.21 percent and 5.73 percent, respectively. However, amidst this economic jubilation, there was a stark contrast in the performance of the primary sector, which saw a concerning contraction of 1.15 percent.
This downturn in the primary sector, encompassing vital elements such as agriculture, livestock, and forestry, marks a troubling trend, as it comes on the heels of a meager 1.42 percent growth in 2021. In fact, this dip represents the first time this sector has experienced a decline since the 2.57 percent drop recorded the year before.
On the flip side, Bhutan’s secondary (manufacturing) and tertiary (service) sectors emerged as the unsung heroes of the nation’s GDP story, boasting impressive growth rates of 5.6 percent and 6.62 percent, respectively.
The primary sector, which comprises crop cultivation, livestock rearing, and forestry, grappled with significant challenges. According to the National Accounts Statistics 2023, crop production staggered with a negative growth rate of 4 percent in 2022, in stark contrast to the 1.46 percent growth registered in 2021. This decline of 5.46 percentage points from the previous year signifies a substantial setback.
The Integrated Agriculture and Livestock Census of Bhutan 2022 painted a grim picture, revealing that primary cereals production plummeted to 70,168 metric tonnes in 2022, marking an eight percent decrease compared to 2021.
Despite these challenges, the primary sector managed to contribute a value addition of Nu 15,521.92 million in 2022, only slightly lower than the Nu 15,723.07 million recorded in 2021. This underscores the sector’s continued significance in the country’s economy, with the crop segment alone constituting approximately 6.81 percent of the GDP.
The livestock sector, although witnessing a growth rate of 0.31 percent in 2022, fell short of the 1.28 percent growth observed in 2021. Despite this, the livestock sector contributed a modest 0.02 percent to the country’s GDP growth last year. However, there was an increase in value addition compared to previous years, with the Gross Value Added (GVA) for the sector in 2022 reaching Nu 12,025.59 million.
In contrast, forestry and logging demonstrated consistent growth over the past three years, achieving a notable growth rate of 4.07 percent in 2022, up from 1.65 percent the previous year. This 2.42 percentage point increase from 2021 points to a substantial expansion in the sector, contributing 0.09 percentage points to the overall GDP growth in 2022.
However, there is a cloud over the Bhutanese forests as the State of Forest Report 2023 indicates a decrease in forest coverage from 71 percent in 2016 to 69.71 percent in 2022. Timber harvesting through selective felling is identified as the primary driver, accounting for 95 percent of forest health disturbances.
In 2022, Bhutan celebrated an increase in GDP, reaching Nu 23.15 billion, compared to Nu 227.81 billion in 2021 and Nu 204.66 billion in 2020. In terms of their contribution to GDP, the primary sector (agriculture) accounted for 14.67 percent, the service sector contributed 53.5 percent, and the industry sector contributed 31.82 percent.
While the primary sector’s GVA amounted to Nu 33,422.58 million in 2022, compared to Nu 32,326.30 million in 2021, it’s clear that the spotlight is currently shining brighter on Bhutan’s manufacturing and service sectors, leaving the primary sector with some introspection to do in order to regain its lost momentum.
