According to the latest figures from the Royal Monetary Authority (RMA, the central bank), Bhutan's merchandise trade deficit more than trebled during fiscal year 2009/10 (July-June), rising to Nu13.9bn (US$314m, or 22.8% of GDP), from Nu4.3bn (7.9% of GDP) in 2008/09. The reasons were a sharp rise in imports, coupled with only a slight growth in exports. Imports rose by 34.7% year on year in 2009/10, while exports rose by only 3%. In contrast, in the previous year (2008/09), imports had risen by 7% and exports by 2%.

The surge in imports in 2009/10 was largely on account of growth in imports of intermediate and capital goods. Imports of machinery, mechanical equipment and appliances, as well as of base metals and base metal products in particular, showed higher growth in 2009/10 than in 2008/09, contributing to the sharp rise in imports.

The negligible growth in exports was attributable to the weak performance of hydropower and agricultural exports. Although hydropower production remained high, growing domestic industrial demand reduced the amount of surplus power available for export. This poor export performance was somewhat offset by better growth in exports of mineral and mineral-based products, as well as of other manufactured exports.

India remains Bhutan's largest trade partner and its principal destination for both exports and imports, continuing the pattern of the last few years. During 2009/10 India accounted for 93.5% of Bhutan's exports and 77.7% of imports. Hydropower exports to India are still Bhutan's most important overall export, accounting for 39.2% of total exports during the year. India is followed as an export destination by Bangladesh (3.2% of all exports) and Hong Kong (2.8%). After India, the next-largest import sources are Singapore (2.9% of all imports) and Japan (2.2%). Imports from India grew by 20.3% year on year in 2009/10, while imports from other countries grew by 102.2% (from a much lower base). Exports to India grew only by 0.6% during the year, while exports to other countries grew by 43.5%.