Economy of Bhutan explained

Country:Bhutan
Currency:ngultrum (BTN)
Indian rupee (INR)
Year:1 July – 30 June
Organs:SAFTA
Group:
  • Developing/Emerging[1]
  • Lower middle income economy[2]
Population: 780,000 (2021)
Gdp:
  • $2.707 billion(nominal, 2022)
  • $9.937 billion(PPP, 2022)
Gdp Rank:
Growth:
  • -2.38% (fy21) -3.73% (fy22)
  • 4.39% (fy23 est.) 4.5% (fy24 forecast)
Per Capita:
  • $3,144 (nominal, 2022)
  • $13,077 (PPP, 2022)
Per Capita Rank:
Sectors:
Inflation:7.35% (2021)[4]
Poverty:
  • 8.2% (2017)[5]
  • 9.8% on less than $3.20/day (2020f)[6]
Gini:37.4 (2017, World Bank)[7]
Hdi:
Cpi: 68 out of 100 points (2023, 26th rank)
Labour:
  • 381,742 (2019)[10]
  • major shortage of skilled labour
  • 61.6% employment rate (2015)[11]
Occupations:
Unemployment: 3.2% (2017 est.)
Industries:cement, wood products, processed fruits, alcoholic beverages, calcium carbide, tourism
Edbr: 89th (easy, 2020)[12]
Exports: $345 million (2021)
Export-Goods:Iron and Steel, Salt Sulphur and Cement, Aircraft
Export-Partners:
Imports: $1.12 billion (2021)
Import-Goods:machinery, minerals, motor vehicles, metals
Import-Partners:
Current Account: −$547 million (2017 est.)
Gross External Debt: $2.671 billion (31 December 2017 est.)
Fdi:
  • $160.4 million (31 December 2017 est.)
  • Abroad: n/a
Debt: 106.3% of GDP (2017 est.)
Revenue:655.3 million (2017 est.)
Expenses:737.4 million (2017 est.)
Balance:−3.4% (of GDP) (2017 est.)
Aid:$985 million (India) (2015-16)
Reserves: $970 million (August 2022)
Cianame:bhutan
Spelling:US

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.

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.[14]

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.[15] [16]

Macro-economic trend

This is a chart of trend of gross domestic product of Bhutan at market prices http://www.imf.org/external/pubs/ft/weo/2007/01/data/weorept.aspx?sy=1980&ey=2008&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=37&pr1.y=8&c=514&s=NGDP_R%2CNGDP_RPCH%2CNGDP%2CNGDPD%2CNGDP_D%2CNGDPRPC%2CNGDPPC%2CNGDPDPC%2CPPPWGT%2CPPPPC%2CPPPSH%2CPPPEX%2CPCPI%2CPCPIPCH%2CLP%2CBCA%2CBCA_NGDPD&grp=0&a=|reported by the International Monetary Fund:

Year GDP (millions of BTN) GDP (millions of USD)
1985 2,166175
1990 4,877 279
1995 9,531 294
2000 20,060 460
2005 36,915 828
2008 45,000 1280
2011 84,950 1695
2014 119,5461784
2017 159,5722294

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.[17]

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).[18] [19] [20] Bhutan is also a member of the pan-Asian Asia Cooperation Dialogue (ACD), and the Asian Development Bank.[21] [22]

Bhutan first applied to join the WTO in 1999 and as an applicant, was quickly granted observer status[23] 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.[24] [25] [26] 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.[27] [28] 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;[29] 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.[30]

GNH versus GDP

In the 1970s the King placed Gross National Happiness over Gross Domestic Product.[31] [32]

See also

References

Notes
Public domain
Citations

Further reading

External links

Notes and References

  1. Web site: World Economic Outlook Database, April 2019 . . IMF.org . 29 September 2019.
  2. Web site: World Bank Country and Lending Groups . . datahelpdesk.worldbank.org . 29 September 2019.
  3. Web site: The World Factbook . . CIA.gov . 25 January 2019.
  4. Web site: World Economic Outlook Database, October 2019 . . IMF.org . 20 October 2019.
  5. Web site: Poverty headcount ratio at national poverty lines (% of population) - Bhutan . data.worldbank.org . World Bank . 21 March 2020.
  6. Book: South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks . 92 . . 12 April 2020 . 978-1-4648-1566-9 . 14 April 2020.
  7. Web site: GINI index (World Bank estimate) . . data.worldbank.org . 25 January 2019.
  8. Web site: Human Development Index (HDI) . . hdr.undp.org . 8 September 2022 . https://web.archive.org/web/20190814034536/http://hdr.undp.org/en/indicators/137506 . 14 August 2019 . live .
  9. Web site: Inequality-adjusted HDI (IHDI) . hdr.undp.org . . 22 May 2020.
  10. Web site: Labour force, total - Bhutan . data.worldbank.org . World Bank . 5 March 2020.
  11. Web site: Employment to population ratio, 15+, total (%) (national estimate) - Bhutan . data.worldbank.org . World Bank . 5 March 2020.
  12. Web site: Ease of Doing Business in Bhutan . Doingbusiness.org . 2017-11-29 .
  13. Web site: Bhutan (BTN) Exports, Imports, and Trade Partners .
  14. Web site: 1961 – First Five-Year Plan launched . Bhutan 2008 . 22 August 2011 . https://web.archive.org/web/20110825224229/http://www.bhutan2008.bt/en/node/219 . 25 August 2011 . dead .
  15. Web site: UN list of least developed countries | UNCTAD .
  16. Web site: How Bhutan graduated from the 'Least Developed Country' status . 12 March 2023 .
  17. Web site: Selling and buying of tobacco products are no longer illegal in Bhutan . DailyBhutan . 6 December 2021.
  18. Penjore . D . 2004 . Security of Bhutan: walking between the giants . Journal of Bhutan Studies . 10 . 108–131 . Cambridge University Press.
  19. Web site: Bhutan International Investment Agreements Navigator UNCTAD Investment Policy Hub . 2024-05-01 . investmentpolicy.unctad.org.
  20. Web site: South Asian Free Trade Area (SAFTA) LDC Portal - International Support Measures for Least Developed Countries . 2024-04-29 . www.un.org.
  21. Web site: Asia Cooperation Dialogue . 2024-04-29 . www.acd-dialogue.org.
  22. Web site: Asian Development Bank . 12 July 2023 . Bhutan and ADB . 1 May 2024 . www.adb.org . en.
  23. Web site: Bhutan’s Long Journey Into the World Trade Organization . 2024-05-01 . thediplomat.com . en-US.
  24. Web site: Govt says no to WTO for now . 2024-05-02 . The Bhutanese . en-US.
  25. Wangchuk . Karma Tshering . 2021-03-09 . 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 . en . 4 . 1.
  26. Mancall . Mark . Bhutan’s Quadrilemma: To Join Or Not To Join The WTO, That Is The Question . Journal of Bhutan Studies . 2003 . 9 . 5 . Digital Himalaya.
  27. Web site: Opinions vary as Bhutan’s graduation from LDC Status amid joining WTO . 2024-05-01 . The Bhutanese . en-US.
  28. Web site: 13 December 2018 . Graduation of countries from the least developed country category; Resolution adopted by the General Assembly on 13 December 2018. . 1 May 2024 . United Nations (UN.org).
  29. Web site: World Trade Organization (WTO) LDC Portal - International Support Measures for Least Developed Countries . 2024-05-02 . www.un.org.
  30. Web site: Bhutan graduates from LDC status Department of Economic and Social Affairs . 2024-05-01 . www.un.org.
  31. Web site: Sharma . Lyonpo Loknath . 25 October 2021 . What Bhutan got right about happiness - and what other countries can learn . 2022-02-27 . World Economic Forum.
  32. Web site: Bhutan's Gross National Happiness Index . 2022-02-27 . Oxford Poverty & Human Development Initiative (OPHI) . University of Oxford.