Economy of Bhutan

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Economy of Bhutan
Thimpu Bazar 31.JPG
Thimphu is the largest economic centre of Bhutan.
Currency ngultrum (BTN)
Indian rupee (INR)
1 July – 30 June
Trade organizations
SAFTA
Country group
Statistics
PopulationIncrease2.svg 780,000 (2021)
GDP
  • Increase2.svg $2.707 billion(nominal, 2022)
  • Increase2.svg $9.937 billion(PPP, 2022)
GDP rank
GDP growth
  • -2.38% (fy21) -3.73% (fy22)
  • 4.39% (fy23 est.) 4.5% (fy24 forecast)
GDP per capita
  • Decrease2.svg $3,144 (nominal, 2022)
  • Increase2.svg $13,077 (PPP, 2022)
GDP per capita rank
GDP by sector
7.35% (2021) [4]
Population below poverty line
  • 8.2% (2017) [5]
  • Decrease Positive.svg 9.8% on less than $3.20/day (2020f) [6]
37.4 medium (2017, World Bank) [7]
Steady2.svg 68 out of 100 points (2023, 26th rank)
Labor force
  • Increase2.svg 381,742 (2019) [10]
  • major shortage of skilled labour [3]
  • Increase2.svg 61.6% employment rate (2015) [11]
Labor force by occupation
UnemploymentSteady2.svg 3.2% (2017 est.) [3]
Main industries
cement, wood products, processed fruits, alcoholic beverages, calcium carbide, tourism
External
ExportsIncrease2.svg $345 million (2021) [12]
Export goods
Iron and Steel, Salt Sulphur and Cement, Aircraft
Main export partners
ImportsIncrease Negative.svg $1.12 billion (2021) [12]
Import goods
machinery, minerals, motor vehicles, metals
Main import partners
FDI stock
  • Decrease2.svg $160.4 million (31 December 2017 est.) [3]
  • Steady2.svg Abroad: n/a
Increase2.svg −$547 million (2017 est.) [3]
Increase Negative.svg $2.671 billion (31 December 2017 est.) [3]
Public finances
Decrease Positive.svg 106.3% of GDP (2017 est.) [3]
−3.4% (of GDP) (2017 est.) [3]
Revenues655.3 million (2017 est.) [3]
Expenses737.4 million (2017 est.) [3] [note 1]
Economic aid$985 million (India) (2015-16)
Decrease2.svg $970 million (August 2022)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

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 $2,653 million, and 178th according to IMF.

Contents

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 programs are underway with support from multilateral development organisations.

Each economic program 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.

Since 1961, the government of Bhutan has guided the economy through five-year plans in order to promote economic development. [13]

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. [14] [15]

Macro-economic trend

This is a chart of trend of gross domestic product of Bhutan at market prices by the International Monetary Fund:

YearGDP (millions of BTN)GDP (millions of USD)
19852,166175
19904,877279
19959,531294
200020,060460
200536,915828
200845,0001280
201184,9501695
2014119,5461784
2017159,5722294

Bhutan's hydropower potential and its attraction for tourists are key resources. The Bhutanese Government has made some progress in expanding the nation's productive base and improving social welfare.

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. [16]

Membership of economic organizations and agreements

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). [17] [18] [19] Bhutan is also a member of the pan-Asian Asia Cooperation Dialogue (ACD), and the Asian Development Bank. [20] [21]

Bhutan first applied to join the WTO in 1999 and as an applicant, was quickly granted observer status [22] 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. [22] [23] [24] [25] 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. [26] [27] 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; [28] 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. [24] [26] [29]

GNH versus GDP

In the 1970s the King placed Gross National Happiness over Gross Domestic Product. [30] [31]

See also

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References

Notes
  1. the Government of India finances nearly one-quarter of Bhutan's budget expenditures
Public domain
Citations
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  2. "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. World Bank . Retrieved 29 September 2019.
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  6. South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks. World Bank. 12 April 2020. p. 92. ISBN   978-1-4648-1566-9 . Retrieved 14 April 2020.
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  11. "Employment to population ratio, 15+, total (%) (national estimate) - Bhutan". data.worldbank.org. World Bank. Retrieved 5 March 2020.
  12. 1 2 3 4 "Bhutan (BTN) Exports, Imports, and Trade Partners".
  13. "1961 – First Five-Year Plan launched". Bhutan 2008. Archived from the original on 25 August 2011. Retrieved 22 August 2011.
  14. "UN list of least developed countries | UNCTAD".
  15. "How Bhutan graduated from the 'Least Developed Country' status". 12 March 2023.
  16. "Selling and buying of tobacco products are no longer illegal in Bhutan". DailyBhutan. Retrieved 6 December 2021.
  17. Penjore, D (2004). "Security of Bhutan: walking between the giants" (PDF). Journal of Bhutan Studies. 10: 108–131 via Cambridge University Press.
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  23. "Govt says no to WTO for now". The Bhutanese. Retrieved 2 May 2024.
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  25. 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) via Digital Himalaya.
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Further reading