Economy of Bhutan
The economy of Bhutan is based on agriculture and forestry, which provide the main livelihood for more than 60% of the population. Agriculture consists largely of subsistence farming and animal husbandry. Rugged mountains dominate the terrain and make the building of roads and other infrastructure difficult. Bhutan is among the richest by gross domestic product (nominal) per capita in South Asia, at $3,491 as of 2022, but it still places 153rd, and among the poorest in the world. The total gross domestic product is only $2.898 billion, placing Bhutan at 178th according to the IMF.
Bhutan's economy is closely aligned with India's through strong trade and monetary links and dependence on India's financial assistance. Most production in the industrial sector is of the cottage industry type. Most development projects, such as road construction, rely on Indian migrant labour. Model education, social, and environment programmes are underway with support from multilateral development organisations.
Each economic programme takes into account the government's desire to protect the country's environment and cultural traditions. For example, the government, in its cautious expansion of the tourist sector, encourages visits by upscale, environmentally conscientious tourists. Detailed controls and uncertain policies in areas such as industrial licensing, trade, labour, and finance continue to hamper foreign investment. Hydropower exports to India have boosted Bhutan's overall growth, even though GDP fell in 2008 as a result of a slowdown in India, its predominant export market.
Economic history
[edit]Since 1961, the government of Bhutan has guided the economy through five-year plans in order to promote economic development.[1]
In the 1970s, the king placed importance on Gross National Happiness (GNH) over gross domestic product (GDP).[2][3]
In 2010, Bhutan became the first country in the world to ban smoking and the selling of tobacco. In order to stamp out cross-border smuggling during the pandemic, a new Tobacco Control Rules and Regulations (TCRR) 2021 allowed the import, sales and consumption of tobacco products.[4]
On 8 December 2023, Bhutan graduated from the UN's list of least developed countries (LDCs), making it only the 7th country to do so and the first in 3 years.[5][6]
Membership of economic organisations and agreements
[edit]In terms of trade, Bhutan is a member of the South Asian Free Trade Area (SAFTA) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and the South Asia Subregional Economic Cooperation (SASEC).[7][8][9] Bhutan is also a member of the pan-Asian Asia Cooperation Dialogue (ACD), and the Asian Development Bank.[10][11]
Bhutan first applied to join the WTO in 1999 and as an applicant, was quickly granted observer status[12] Beyond that, ascension proceedings at the WTO have been much delayed and periodically put on pause, largely stemming from concerns and considerations of the Bhutanese government itself.[12][13][14][15] The Bhutanese government approved ascension to the WTO in April 2023, at least partly hastened by the country's upcoming graduation from the UN-defined 'least developed country (LDC) category.[16][17] Under WTO rules and processes, ascent of a country with LDC status comes with some leniency in certain requirements, more relaxed timeframes for compliance, and additional support;[18] so, whilst the loss of LDC status, as happened in December 2023, was a reflection of Bhutan's success and development progress, it also meant much further delay in WTO ascension (that is, ascent after the loss of LDC status) would make the journey through to full WTO member status even harder.[14][16][19]
Economic sectors
[edit]Agriculture
[edit]Banking
[edit]Since the early 2020s, Bhutan has adopted cryptocurrency, particularly Bitcoin, as a strategic economic resource. Facing declining tourism revenue, youth unemployment (which reached 19% in 2024), and a growing brain drain, the government began mining Bitcoin using surplus hydropower during high-flow summer months. By 2023, Bhutan had sold $100 million in cryptocurrency to double civil servant salaries, leading to a drop in resignations. As of April 2025, blockchain analysts estimate Bhutan's Bitcoin holdings at over $600 million; around 30% of its GDP. Mining is powered by the kingdom's carbon-negative hydropower and cool climate, aligning with its environmental values. Bhutan also plans to develop Gelephu Mindfulness City, a sustainable economic hub.[20]
Education
[edit]Energy
[edit]Fishing
[edit]Forestry
[edit]Healthcare
[edit]Mining
[edit]Telecommunications
[edit]Tourism
[edit]Transport
[edit]Macroeconomic trend
[edit]Main indicators
[edit]The following table shows the main economic indicators in 1980-2026. Inflation below 5% is in green.[21]
See also
[edit]- List of companies of Bhutan
- Taxation in Bhutan
- Ministry of Finance (Bhutan)
- Ministry of Industry, Commerce and Employment (Bhutan)
- Ministry of Infrastructure and Transport (Bhutan)
- Pasakha
- Royal Monetary Authority of Bhutan
- Royal Securities Exchange of Bhutan
- Bhutanese ngultrum, currency
- Economy of South Asia
References
[edit]- Notes
- Public domain
This article incorporates public domain material from the CIA World Factbook website https://www.cia.gov/the-world-factbook/.- Template:StateDept
- Citations
- ↑ "1961 – First Five-Year Plan launched". Bhutan 2008. Archived from the original on 25 August 2011. Retrieved 22 August 2011.
- ↑ Sharma, Lyonpo Loknath (25 October 2021). "What Bhutan got right about happiness – and what other countries can learn". World Economic Forum. Retrieved 27 February 2022.
- ↑ "Bhutan's Gross National Happiness Index". Oxford Poverty & Human Development Initiative (OPHI). University of Oxford. Retrieved 27 February 2022.
- ↑ "Selling and buying of tobacco products are no longer illegal in Bhutan". DailyBhutan. Retrieved 6 December 2021.
- ↑ "UN list of least developed countries | UNCTAD".
- ↑ "How Bhutan graduated from the 'Least Developed Country' status". 12 March 2023.
- ↑ Penjore, D (2004). "Security of Bhutan: walking between the giants" (PDF). Journal of Bhutan Studies. 10: 108–131 – via Cambridge University Press.
- ↑ "Bhutan | International Investment Agreements Navigator | UNCTAD Investment Policy Hub". investmentpolicy.unctad.org. Retrieved 1 May 2024.
- ↑ "South Asian Free Trade Area (SAFTA) | LDC Portal – International Support Measures for Least Developed Countries". United Nations. Retrieved 29 April 2024.
- ↑ "Asia Cooperation Dialogue". acd-dialogue.org. Retrieved 29 April 2024.
- ↑ Asian Development Bank (12 July 2023). "Bhutan and ADB". Asian Development Bank. Retrieved 1 May 2024.
- ↑ 12.0 12.1 "Bhutan's Long Journey into the World Trade Organization". thediplomat.com. Retrieved 1 May 2024.
- ↑ "Govt says no to WTO for now". The Bhutanese. Retrieved 2 May 2024.
- ↑ 14.0 14.1 Wangchuk, Karma Tshering (9 March 2021). "Bhutan and India's Free Trade Agreement (FTA) and the World Trade Organization (WTO): A Critical Appraisal". Rig Tshoel – Research Journal of the Royal Thimphu College. 4 (1).[dead link]
- ↑ Mancall, Mark (2003). "Bhutan's Quadrilemma: To Join Or Not To Join The WTO, That Is The Question" (PDF). Journal of Bhutan Studies. 9 (5). Archived from the original (PDF) on 11 August 2025. Retrieved 4 May 2024 – via Digital Himalaya.
- ↑ 16.0 16.1 "Opinions vary as Bhutan's graduation from LDC Status amid joining WTO". The Bhutanese. Retrieved 1 May 2024.
- ↑ "Graduation of countries from the least developed country category; Resolution adopted by the General Assembly on 13 December 2018" (PDF). United Nations. 13 December 2018. Retrieved 1 May 2024.[permanent dead link]
- ↑ "World Trade Organization (WTO ) | LDC Portal – International Support Measures for Least Developed Countries". United Nations. Retrieved 2 May 2024.
- ↑ "Bhutan graduates from LDC status | Department of Economic and Social Affairs". United Nations. Retrieved 1 May 2024.
- ↑ Shamim, Sarah. "Can Bitcoin save Bhutan's struggling economy?". Al Jazeera. Retrieved 16 April 2025.
- ↑ "Bhutan". www.imf.org. Retrieved 18 April 2026.
Further reading
[edit]- "The Economic Contribution of Copyright-Based Industries in Bhutan" (PDF). Intellectual Property Division, Ministry of Economic Affairs. Royal Government of Bhutan. October 2011. Retrieved 3 June 2025.
- "Economic Development Policy" (PDF). Royal Government of Bhutan. December 2016. Archived (PDF) from the original on 9 October 2022.
- Shah, Sukhdev (1989). "Developing Bhutan's Economy: Limited Options, Sensible Choices". Asian Survey. 29 (8): 816–831. doi:10.2307/2644628. ISSN 0004-4687. JSTOR 2644628.
- Nayak, Sohini (7 February 2022). "The Bhutanese economic revival". ORF.
- Ranjan, Amit (17 February 2020). "Structural Transformation of Bhutan's Economy: Challenges Remain". National University of Singapore (NUS) Institute of South Asian Studies (ISAS).
External links
[edit]- Global Economic Prospects: Growth Prospects for South Asia The World Bank, 13 December 2006
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