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The Punaksanchu-2 hydropower station will provide electricity to industries and construction companies, and if tourism-related industries develop, the country’s economy will grow by 8.9% next year.
This is according to the 2024-25 budget report.
The report said the government’s economic support packages had helped boost the economy, suggesting it could boost recovery.
The economic growth target this year is 6.3%, and it is expected to be about 4.5% higher than the published target in 2023.
The government had allocated Rs 97.63 lakh crore for the first year of the 13th Plan in fiscal 2024-2025, of which only Rs 2.5 lakh crore was received out of the Rs 1.5 lakh crore in the economic support package.
Growth will be driven mainly by investment, especially after 2025, when the government lifts a ban on lending to private sector investments, the report said.
Tourism is gradually improving with an increase in international and regional tourists, which indicates a growing economy.
The agricultural sector growth target for 2023 is 1.8%, which is minus 1.1 percentage points lower than the minimum percentage.
The agricultural sector is expected to grow by 5% in 2024, driven by increased crop and livestock production.
However, climate-related risks and low yields also affected the scale of agricultural growth, the report said.
To address these issues, the government needs to develop better advertising-related mechanisms and policies.
The industry is expected to grow by 6.7% and 17.7% in 2024 and 2025 respectively.
This is mainly due to the Puna Gtsangchu hydropower project’s power generation increasing by 5.6% and 28.9% in 2025 and 25 respectively.
Mining and quarrying, and manufacturing are also likely to improve, due to exemptions and higher costs in the construction industry.
Domestic industry will increase production due to higher electricity demand and is expected to grow by 8.6% in 2025 and 6.9% in 2024.
In 2023, the industry growth rate is expected to decline by -4.9%, mainly due to electricity.
On the other hand, mining, quarrying and manufacturing accounted for 7.9% and 4.5% respectively.
In terms of services, the government plans to attract 200,000 and 300,000 tourists in 2024, and the tourism industry is likely to grow as per the set targets.
It will also benefit the transportation, hospitality, and entertainment sectors, as transportation and warehousing companies are expected to grow by 5.9% and 73% in 2024 and 2025, respectively.
Hotel services are expected to grow by 16.2% in 2024 and 20.7% in 2025, and entertainment, leisure and other services are expected to grow in both 2024 and 2025.
By 2023, the services sector will grow by 10.7%, with the remainder of the growth coming from trade, transportation, restaurants and entertainment and leisure services.
However, the report said the economy is being affected by global and domestic factors, and Bhutan’s economy is expected to slow down due to the decline in commodity markets and exchange rates, which will affect the economy.
Ugyen Dorje
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