Bhutan’s GDP Growth Projected By IMF To Be Above Global Average


According to the World Bank, Bhutan's GDP growth is expected to jump to 7.4 percent this fiscal year.

Rainbow, white prayer flags and two monks seen in Gangtey, Bhutan. (Source: Danita Delimont)


By Tshering Dorji | Kuensel

The International Monetary Fund (IMF) has estimated Bhutan’s economic growth for 2019 at 5.5 percent, higher than the global growth forecast of three percent.

However, this figure is still lower than the estimates for a few countries in the region such as Bangladesh, Nepal, India, Maldives and China.

The 2019 World Economic Outlook, which was launched in Washington D.C on October 15, projects the lowest level of global economic growth to 3 percent since the financial crisis in 2008.

This is attributed to the significant tariff increase between the United States and China that emerged from the trade war, which has hurt business sentiment and confidence globally.

According to the World Bank, Bhutan's GDP growth is expected to jump to 7.4 percent this fiscal year with the commissioning of Mangdechhu, a new hydropower plant, and the completion of the maintenance of Tala hydropower plant.


Graphic: World Bank


Growth in the fiscal year 2021 is forecasted to be just below 6 percent on the base of strong tourism growth and increased revenue from the existing power plants.

Emerging and developing Asia, according to the IMF, remains the main engine of the world economy, dominated by India and China.

Bhutan’s economic growth

As per the IMF estimates, Bhutan has grown by an average of 8.4 percent between 2001 and 2010. In 2011, the country’s growth hit 9.7 percent, the highest in the decade. 

Between 1998 and 2007, the country’s economy grew at an average rate of 7.7 percent, and in 2008 Bhutan experienced an all-time high growth of 10.8 percent.

In contrast to various projections, including those given by the IMF and World Bank that expected Bhutan to be one of the fastest-growing economies in 2017 and 2018, the latest figures from the World Economic Outlook actually revealed a growth of 4.6 percent in 2018 and 6.3 percent in 2017.

The earlier World Economic Outlook projected Bhutan’s real GDP to grow at 8.4 percent in 2018. Even in 2017, the IMF had projected the country’s GDP growth to be 8.6 percent.    

In addition, Bhutan’s current account balance is also estimated to improve to 9.6 percent (in the red in 2020) and to be on the positive side in 2024.

However, the Fund’s chief economist, Gita Gopinath said that growing disparities in the region is a concern. To reduce inequalities, she said that good governance is the key. “Policy makers should reintegrate investment and undo trade barriers.”

Several headwinds on the horizon

At a time when Bhutan is putting in efforts to attract foreign investments, the World Economic Outlook also revealed that financial flows to and from advanced economies have been much weaker since the global financial crisis. 

Other investment flows have also fallen sharply as global banks reduced the size of their balance sheets after dramatic expansion of their cross-border activities during the pre-crisis boom.

Foreign Direct Investments (FDIs) from  advanced  economies,  as  well  as inward FDIs,  have come  to  a  virtual  standstill.

In the emerging markets and low-income developing countries, public debt ratios are high and rising. The cost of servicing debt is also increasing, unlike in advanced economies where low interest rates have compensated for high debt levels. Some countries, such as Bhutan, are vulnerable to exchange and interest rate shocks.

To cushion these risks, it is important to strengthen fiscal policy. The Director of the Fiscal Affairs Department of the IMF, Vitor Gaspar, said that countries’ spending must be framed in the context of a comprehensive growth and development strategy.

Building tax capacity, he said, is necessary to enable a country to generate the extra revenue that underpins inclusive development. 


As part of its efforts to realise its wide-ranging GNH philosophy of life, Bhutan has prioritised conservation of the environment, including commitments to remain carbon neutral by keeping absorption of the greenhouse gases higher than emissions.

Source: United Nations Development Programme


Climate change, he added, is one of the greatest factors that could undermine global financial stability.

The Fiscal Monitor that was also launched on October 16 presented several options such as labour tax cuts, payments to households and public investment.

The simplest way to illustrate the point is to focus on a single instrument, such as carbon taxation. If a carbon tax of USD75 per tonne is implemented globally, China and India will account for almost 70 percent of the CO2 reductions among the G20 economies.

“It is important to realise that current pledges under the Paris Agreement are not enough. They will limit global warming to 3°C. This is well above the safe level. To limit global warming to 2°C or less (the level deemed safe by scientists), finance ministers need to take further substantial fiscal policy actions,” Vitor Gaspar explained.


This article first appeared in Kuensel and has been edited for Daily Bhutan.



Related Posts

Bhutan To Revise 3rd Foreign Direct Investment Policy To...

Most of the FDI companies are in the hotel sector today, therefore it is important for us to diversify.

Mar 29, 2019 18:32

Cottage And Small Industry Which Saw 20% Growth Is A Pillar Of...

To date, the CSIs constitute more than 90 percent of Bhutan’s industry sector.

Jul 19, 2018 13:46

Bhutan’s National Revenue Records 24 Percent Growth

According to the provisional revenue report 2017-18, tax revenue increased to Nu 27.10B, an increase of 25 percent from...

Nov 23, 2018 12:05

iMerit Bhutan Launched, Hopes To Create Far-Reaching...

iMerit strives to drive social and economic change by tapping into an under-resourced talent pool, thereby creating...

Sep 04, 2019 10:58

In A Bid To Move From 'Aid To Trade', Bhutan Aims To Forge More...

Foreign Minister, Dr Tandi Dorji said that the government ‘wants to change’ the way Bhutan’s foreign policy has been...

Mar 11, 2019 06:50

Bhutan’s Foreign Direct Investment Saw 10 Fold Increase From...

The jump in figure is due to the large number of capital-intensive projects (such as hotels) being approved in 2018.

Feb 24, 2019 13:51



Employment opportunities amid crisis - Tour guides opts farming

A tour guide could earn a minimum of Nu 30,000 per month during the peak tourist season in Bhutan. The income made was sufficient to support...

May 19, 2020 19:53

Covid-19 response must address gender-based violence, other rights of women and girls

“The social and economic stress that Covid-19 pandemic brings upon households places women and girls in vulnerable positions, burdening them...

May 12, 2020 16:46


Story of Final Year College Student Who Joined college after reopening of eduction institution amid outbreak of COVID 19

Sonam Dorji a final year student shares this thought on his first day of college amid pandemic.

Jul 04, 2020 14:03

Significant pilgrimage sites of Guru Rinpochoe in Bhutan

Discover sacred pilgrim sites of Guru Rinpochoe in Bhutan and the reasons why every buddhist must travel to these most venerated places of...

Jul 01, 2020 11:28


Karma – Female Archer From Bhutan Qualified For Tokyo 2020 Olympic Quota

Karma has been specialising in Olympics-style archery since 2009.

Nov 30, 2019 13:18

Bhutan’s Pelden Wangchuk Wins 10th Edition Of Tour 0f Dragon Mountain Bike Race

This year, the race also saw the highest number of female participants compared to past years.

Sep 10, 2019 01:08


Once the booming Handicraft Shops in Paro Dying- Paro Today

Paro town looks so different in its history as tourist destination in Bhutan.

Jun 24, 2020 16:58

Celebrating Bhutan’s Entrepreneurs: Namkhar Gyaltshen Of Transcend Artisan

This story is part of an exclusive feature by Yeewong Magazine in Dec 2018 on celebrating entrepreneurship in Bhutan.

Mar 06, 2020 11:48


You cannot travel to Bhutan without tour guides - Featuring Mr Tobgay, experienced senior guide from Druk Asia.

In this series, Dailybhutan speaks to licensed tour guide Mr Tobgay who is one of the most senior and experienced tour guides working for...

Jun 21, 2020 21:07

Promoting staycation in Bhutan amid COVID 19

If you are looking out for an opportunity to let yourself feel the inner peace, discover intricate human ideologies and instinct, and an...

Jun 09, 2020 21:43


Food on Wheels- First of its kind in Bhutan

The World's Largest Fast Food Restaurant Chains doesn't exist in Bhutan.

Mar 04, 2020 09:39

Amazing Stories from the Eastern Part of Bhutan

You can't say you have visited the eastern part of Bhutan unless you have experienced the following bizarre things.

Mar 02, 2020 19:02

Subscribe to our newsletter

Never miss out on new happenings and news stories!

Download Daily Bhutan Mobile App

Connecting with us just got easier!