Individual Assignment

Gedu College of Business Studies

Gedu, Chhukha

Individual Assignment Submitted by:

Ishor Adhikari ( 03240114)

SAFE,1st ,BFE,A

31/03/2025

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 DECLARATION

Module Code: ECN102 Type of Course Work: Individual Task

Module Title: Macroeconomic Module Tutor: Gaki Dem
Date of Submission: 31 March 2025

I Hereby declare that this academic work is my own and those referred ideas from other sources
have been appropriately acknowledged. The material in this submission has not been previously
submitted for assessments. I Understand that if found otherwise, my academic work will be
cancelled and no marks will be awarded besides legal consequences.

Ishor Adhikari ( 03240114)

FOR MODULE TUTOR

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Introduction

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National account aggregates together with macroeconomic indicators function as vital
instruments which help society monitor economic development as well as assess overall health
of an economy. These indicators enable policymakers and economists, as well as researchers
to studies economic performance and recognize trends for designing sustainable development
strategies. National account aggregations including Gross Domestic Product (GDP) and Gross
National Income (GNI) and Net National Product (NNP) assess the complete output value of a
country in addition to its income distribution patterns. Macroeconomic indicators which include
inflation rates together with unemployment patterns and the trade balance represent main
factors for assessing economic stability and productivity and growth potentials (World Bank,
2023). The combination of economic indicators reveals complete economic information that
steers both governmental and business sector choices.

A small and developing economy like Bhutan needs macroeconomic indicators for complete
economic viability assessment as well as benchmarking long-term endurance. Bhutan guides its
economic policies through Gross National Happiness (GNH) development model which
supports ecological preservation and social welfare while still relying on traditional economic
indicators. Bhutan depends heavily on hydropower exports and tourism yet faces economic
challenges because it is a landlocked nation (Asian Development Bank [ADB], 2023). The
comprehension of macroeconomic patterns helps Bhutan's policymakers to solve economic
challenges by building strategies which fulfill the country's sustainable development targets.

National account analysis with time series observation of macroeconomic data gives
economists the ability to detect both major patterns and irregular patterns. Economic patterns
reveal how global conditions, domestic decisions and outside disturbances influence Bhutan’s
economic output. The assessment of Bhutan’s indicators against regional averages like those
from South Asian economies establishes its position within the region. Comparing Bhutan's
performance to outside data reveals both its successful points and policy areas which need
adjustment to boost economic competition.

This report investigates Bhutan’s national account statistic such as, gross domestic, inflation
rate and trade balance through examination of these metrics during the previous five year
period. The analysis examines both Bhutan’s statistical pattern’s and how Bhutan compares to
neighboring units. The assessment of GDP growth and inflation together with trade balance
statistics will establish Bhutan economic pattern while identifying its main opportunities and
difficulties. The report outcomes will support evidence-based policy making which enables
authorities to create plans to secure economic stability together with competitive advantages
and maintains durable economic expansion.

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 Gross Domestic Product (GDP)
Gross Domestic Product (GDP) stands as the fundamental national economic indicator which
measures the complete monetary value of all industrial activities during a specified time period.
GDP functions as the principal economic performance gauge that shapes government decisions
about economic policy as well as driving foreign trade operations and decided investments.
Economic growth measured through stable GDP indicates that the country experiences
expansion which leads to more jobs and improved income levels alongside better living
conditions according to World Bank (2023). A falling GDP signals economic decline that
frequently triggers employment losses and decreased purchasing power and weakens business
trust in the market. The vitality of GDP growth for Bhutan depends on how these vital sectors of
hydropower and agriculture and tourism influence the economy. Analysis of GDP data during
the last five years through an International Monetary Fund [IMF] (2022) framework will evaluate
Bhutan’s economic direction as well as its market position and advancement relative to regional
economies.

The following table shows GDP and trend analysis of Bhutan, India and Nepal.

Growth Growth Growth

Year Bhutan Rate India Rate Nepal Rated
2019 2.62 Billion 5.76% 2836.6 Billion 3.90% 34.19 Billion 6.70%
2.458 2674.85
2020 Billion -10.20% Billion -5.78% 33.43 Billion -2.40%
2.769 3150.31
2021 Billion 4.42% Billion 9.70% 36.92 Billion 4.80%
2.895
2022 Billion 5.21% 3385 Billion 7% 41.18 Billion 5.60%
3567.55 40.908
2023 2.91 Billion 4.88% Billion 8.20% Billion 2%
Table 1 GDP of Bhutan, India and Nepal (source: World Bank)

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Series1

-12.00% -10.00% -8.00% -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00%

Figure 1 Bhutan’s Trend Analysis Graph

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 5

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Series1

-8.00% -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00%12.00%

Figure 2 India’s Trend Analysis Graph

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Series1

-4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00%

Figure 3 Nepal’s Trend Analysis Graph

Analysis of the Trend analysis of Bhutan, India and Nepal

The three countries of Bhutan India and Nepal demonstrate substantial economic shifts through
combined national internal and international market economic forces throughout the recent five-
year period. Notable Fluctuations and Anomalies

The Gross Domestic Product of Bhutan plunged to a ten percent negative growth rate in 2020
before its subsequent increase in subsequent years. Bhutan experienced the GDP reduction in
2020 because the COVID-19 pandemic damaged essential economic sectors including
hydropower exports and tourism developments (World Bank, 2023). The GDP growth rate in
Bhutan improved gradually starting from 2021 until reaching 5.21% in 2022 and 4.88% in 2023.

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The GDP of India decreased by -5.78% in 2020 alongside Bhutan but experienced a robust
recovery when its growth rate reached 9.70% in 2021. The economy demonstrated quick
recovery because of major stimulus packages alongside industrial expansions and a rising
consumer market (International Monetary Fund [IMF], 2022).

The GDP of Nepal decreased by -2.40% in 2020 while avoiding the full-scale contraction that
affected both Bhutan and India. The country experienced gradual changes in GDP growth from
4.80% in 2021 to 5.60% in 2022 and to a lower 2% in 2023 which demonstrated slower recovery
than its regional peers after the pandemic.

Fundamental Factors Affecting GDP Fluctuation

1. Impact of the COVID-19 Pandemic (2020 Decline)

The pandemic caused the entire year's negative economic growth in all three countries during
2020. Tourism restrictions caused intensive economic damage to the Bhutanese economy
because it functions as a vital revenue generator. The economies of India and Nepal faced
difficulties during lockdowns and cutback in consumer demand and global trade disruptions
according to Bhutan National Statistics Bureau (2023).

2. Economic Recovery and Government Policies (2021-2023)

Bhutan experienced economic recovery in 2021 with a growth rate of 4.42% after the rebound of
hydropower production together with government economic stimulus. India experienced fast
economic growth during 2021 and 2022 because of industrial development along with boost in
public investment combined with rising investor optimism (IMF, 2022). Nepal faces structural
barriers to recovery because it recorded 2% economic growth in 2023.

3. Regional and Global Economic Conditions

Several economic factors at the global scale including price volatility, energy market conditions
and supply network instability influence the different rates of GDP expansion. The economic
performance of India strongly influences Bhutan's trade and hydroelectric power exports
because the country depends heavily on India for both aspects (World Bank, 2023).

Similarities between the GDPs

1. Pandemic-Driven Economic Contraction (2020)

During 2020 the economic performance of Bhutan together with India and Nepal showed
negative GDP growth due to the COVID-19 pandemic. The World Bank (2023) established
lockdowns accompanied by reduced trade and dropping consumer demand as origins of the
economic downturn. Bhutan suffered a particularly dramatic economic downturn of 10.20% for
two reasons including its small tourism market and reliance on hydropower exports to India
which experienced decreased demand due to the pandemic according to Bhutan National
Statistics Bureau (2023).

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 2. Post-Pandemic Recovery (2021-2023)

The three countries achieved economic recovery in 2021 through business sector reopening
within their territories and expanded government fiscal policies combined with resumed
international trade. The three countries of Bhutan and India alongside Nepal achieved economic
growth outcomes in 2021 with India showing the most significant increase at 9.70% due to
industrial expansion alongside government financial resources (International Monetary Fund
[IMF], 2022). Bhutan reported a 4.42% economic growth in 2021 as the country increased its
exports of hydropower and received support from government relief programs.

Key Differences from the finding

1. Magnitude of Economic Shock and Recovery

The severe decline of Bhutan's GDP in 2020 became the highest in the region at -10.20% while
Nepal experienced only a minor economic contraction at -2.40%. The broad economic structure
of Bhutan creates heightened sensitivity to external disruptions because its core industries
mainly consist of hydropower and tourism.

India led the fastest recovery with a 9.70% growth rate during 2021 but Bhutan demonstrated a
more gradual recovery since its economic structure revealed weaknesses that limited sectoral
diversification.

2. Long-Term Growth Patterns

The GDP growth rate in 2023 was 4.88% for Bhutan whereas India achieved 8.20% and Nepal
registered a rate of 2%. The data implies that Bhutan maintains sustainable economic
expansion at rates which fall below those of India because of its smaller economy with fewer
diverse sectors.

Implications for Bhutan’s Economic Policy

The economy of Bhutan remains susceptible to outside economic disruptions because it
depends heavily on tourism and hydropower operations. The economy needs to diversify for
ensuring its long-term resilience. The economic relationships between Bhutan and India create
a situation where regional prosperity affects Bhutan’s economic development potential. Bilateral
trade agreements that promote economic stability through enhancement would benefit Bhutan.
The slower economic recovery following the pandemic requires the government to shift its
stimulus plans and economic policies toward sustainable enduring growth instead of immediate
recovery programs.

1. Economic Diversification

New investments in agriculture, manufacturing and digital industries should help the country
decrease its relationship with hydroelectricity and tourism. Initiative to support small and
medium-sized enterprises (SMEs) should aim at creating employment while increasing domestic
manufacturing capacity.

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 2. Strengthening Trade and Regional Integration

The country should use India and other countries of South Asia as partners to build stronger
trade agreements that minimize economic risks. Bhutan should investigate foreign markets to
export both organic products from agriculture and local handicrafts.

3. Infrastructure Development and Investment Promotion

The country should move toward developing renewable energy systems past hydropower by
implementing solar and wind energy systems to establish a more diverse energy sector. The
digital infrastructure should happen to assist e-commerce and digital business start-ups which
would help Bhutanese companies penetrate world markets.

4. Resilient Economic Policies

Bhutan should create economic stabilization funds which will serve as response measures
during forthcoming crises and economic shocks. The country must use progressive income
taxes together with attractive investment opportunities for both domestic and international
investors.

5. Boosting Human Capital and Innovation

It is tedious education together with vocational training must receive growth investments to
develop workforce competence for upcoming industries in Bhutan. The country should fund
agricultural and technological research and sustainable industrial innovation.