flag Bhutan Bhutan: Economic Outline

Economic Indicators

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The economy of Bhutan, one of the world's smallest and least developed economies, is based on agriculture and forestry. However, the main source of revenue is the sale of electricity to India. The country has a sustained growth due to the development of the hydroelectric sector and the dynamism of the tourism sector. Growth was estimated to have risen to 5.3% in 2019 from 3.7% a year earlier higher power exports and household consumption provided support. This was also 0.4 percentage point higher than IMF's previous estimate for growth. A fall in tourism revenue in 2020 and 2021 owing to the coronavirus pandemic and social distancing measures threatened financial stability and weighed on economic growth. The annual GDP growth rate in 2021 was negative and stood at -1.9%. Economic growth will continue to be supported by the hydropower sector and in 2022 it is expected to reach 4.2% (IMF, 2022). Ties to the outside world - with the exception of India - will remain minimal.

The government has been working on the 12th five-year plan (2019-2023), which focuses on decentralization from national to local governments, by almost doubling the share of resources allocated and by increasing their authority and functions. National self-sufficiency and inclusive socio-economic growth also remain among the pillars of the new five-year plan, meaning the government will pursue an expansive budgetary policy. Debt-to-GDP ratio spiked from 106.6% in 2019 to 120.7% in 2020 and 123,3% in 2021 (Statista, 2022); however, most debt is considered sustainable as they are covered by financial arrangements with India under which the latter finances the construction of hydropower plans in Bhutan in exchange of power imports. At the same time, government debt is anticipated to decrease to 120.5% in 2022 and 117.3% in 2023. Current account deficit narrowed to USD 360 million in 2019 from USD 480 million a year earlier as higher tourism revenues and exports partially offset strong imports. Bhutan modified its tourism policy in order to attract more Indian tourists, who are not subjected to the daily tourism tax of USD 250. Due to this modification, the number of Indian tourists increased substantially. The current Account deficit in Bhutan reached 522.4 million USD in 2021 (Trading Economics, 2022). Inflation is closely linked to the Indian economy as Bhutan's domestic currency ngultrum is pegged to the Indian rupee. Inflation increased to 4.2% in 2020, against 2.8% in 2019, and then 6.3% in 2021, but is expected to rise further to 6.9% in 2022 (World Economic Outlook IMF, 2022) as the rupee loses value against major international currencies and food prices rise in the country. Fiscal deficit was forecasted to widen to 4.9% by 2021 before stabilising in the medium term amid rising revenue collection. Bhutan is seeking to expand the base for the green tax by including tourist vehicles.

Bhutan remains a poor country, where living conditions are made difficult by hilly areas and a poor-quality infrastructure. However, GDP per capita doubled between 2004 and 2014 whereas the poverty rate fell to 9.9% in 2019. Unemployment remained low but in sharp increase on 2020 at 2.4% in 2021. Bhutan is also the first country using the Gross National Happiness index to measure the well-being of its population not only based on economic indicators, but also on other factors summarized in the four GNH pillars: sustainable and equitable socio-economic development, environmental conservation, preservation and promotion of culture and good governance.

Main Indicators 20202021202220232024
GDP (billions USD) 2.422.442.712.963.24
GDP (Constant Prices, Annual % Change) -2.3-
GDP per Capita (USD) 3,2483,2453,5623,8564,187
General Government Gross Debt (in % of GDP) 130.9132.4130.8127.5126.6
Inflation Rate (%)
Current Account (billions USD) -0.38-0.30-0.66-0.54-0.43
Current Account (in % of GDP) -15.8-12.1-24.5-18.1-13.2

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Bhutan Ngultrum (BTN) - Average Annual Exchange Rate For 1 GBP 90.7383.8191.2488.0095.01

Source: World Bank - Latest available data.


Main Sectors of Industry

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 55.8 10.1 34.1
Value Added (in % of GDP) 19.2 34.2 44.0
Value Added (Annual % Change) 2.1 2.0 6.3

Source: World Bank - Latest available data.

Socio-Demographic Indicators 20222023 (e)2024 (e)
Unemployment Rate (%)

Source: IMF – World Economic Outlook Database - Latest available data


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The Active Population in Figures

Labour Force 374,905383,196378,371

Source: International Labour Organization, ILOSTAT database

Total activity rate 69.35%69.71%70.04%
Men activity rate 75.81%76.25%76.69%
Women activity rate 61.90%62.13%62.31%

Source: International Labour Organization, ILOSTAT database


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Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Country Risk

See the country risk analysis provided by Coface.


Indicator of Political Freedom


The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Partly Free
Political Freedom:

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House


Indicator of Freedom of the Press


The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:

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Sources of General Economic Information

Main Online Newspapers and Portals
Bhutan Broadcast Service
Daily Bhutan
Kuensel Online
The Bhutanese
Bhutan News Network
BBC Country Profile, Bhutan
Useful Resources
Ministry of Finance
Ministry of Economy
Royal Monetary Authority

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Latest Update: February 2023

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