Bhutan’s economy is on track for a solid year, with growth projected to reach nearly 7%, a sign of continued resilience and expanding economic momentum. The positive outlook reflects strong performance in key sectors and sets the stage for even faster growth in the coming year.
At the heart of this expansion is Bhutan’s hydropower sector, which continues to power the nation’s development. Large-scale infrastructure projects are driving industrial activity, with output expected to grow by more than 12% this year and maintain a healthy pace of 10.6% next year. This steady industrial growth highlights the country’s long-term strategy of leveraging clean energy as a cornerstone of economic progress.
The upbeat projections build on an already impressive performance last year, when Bhutan’s economy grew by 8.5%. A surge in hydropower generation played a major role, with electricity output rising by over 20% following the commissioning of major projects such as the 1,020 MW Punatsangchhu-II plant.
Tourism also made a strong comeback, with arrivals increasing by 30%. This revival provided a significant boost to hotels, restaurants, and transport services, helping to broaden the base of economic activity and support livelihoods across the country.
Looking ahead, Bhutan’s development plans continue to focus on investment and infrastructure. The implementation of the 13th Five-Year Plan is expected to further accelerate growth, particularly through capital expenditure in key sectors. While this increased spending may lead to a fiscal deficit of around 3.5% this year, it reflects a proactive approach to building the foundations for sustained economic expansion.
At the same time, authorities are navigating global uncertainties, including potential increases in fuel and import costs due to international developments. However, Bhutan’s strong growth drivers—particularly in hydropower and tourism—position the country well to manage these challenges.
Inflation remains moderate, recorded at 3.5% last year, with food prices seeing slightly higher increases at 5.5%. Meanwhile, government spending rose to 30% of GDP, largely directed toward capital investments that are expected to yield long-term benefits.
With a projected 7% growth rate and strong sectoral performance, Bhutan’s economy is entering a phase of sustained and inclusive expansion, underpinned by strategic investments and a clear development vision.
