Bhutan: Economic Outline

Economic Indicators

Bhutan's GDP increased very rapidly during this decade, reaching up to 21.4% growth in 2007-2008. It then suffered the consequences of the slowing down of Indian growth in 2008, which was affected by the global economic crisis. The growth rate increased to 6.8% in 2010 and should remain stable around 6% in 2011, sustained by the development of the hydro-electric energy sector.

Bhutan's economy, one of the smallest and least developed in the world, is based on agriculture and forestry. However, the main source of revenue is the sale of electricity to India. The economy is closely linked to India's through strong trade links and dependence on India's financial assistance. From the fact of being landlocked, Bhutan has not been able to benefit from significant trading of its food products. The historical trade routes through the Himalayan summits, which link India to Tibet have been closed since the Chinese military take over of Tibet in 1959, a fact which limits development (even though smuggling still brings in Chinese products into Bhutan).

Bhutan's tenth five-year plan (2008-2013), is aimed towards rural, regional and private sector development. The increase in public spending, following the implementation of this plan, has led to the deepening of the budget deficit, exposing the economy to the risk of overheating and causing the public debt to grow. Budget control, improving cash management, as well as strengthening bank monitoring are now the government’s priority.

Bhutan remains a poor country, where living conditions are made difficult by the landscape and the weak infrastructures. Life expectancy there is 67 years, and the rate of infant mortality is slightly less than 10%, with a low level of education.

Main Indicators	2009	2010	2011	2012 (e)	2013 (e)
GDP (billions USD)	1.27	1.46	1.64	1.83	2.04
GDP (Constant Prices, Annual % Change)	6.7	8.3	8.1	8.5	7.9
GDP per Capita (USD)	1,827	2,069	2,299	2,546	2,812
General Government Gross Debt (in % of GDP)	67.7e	70.9	81.3e	95.3	103.5
Inflation Rate (%)	8.6	7.0e	6.5	5.0	4.5
Current Account (billions USD)	-0.12	-0.07	-0.18	-0.29	-0.39
Current Account (in % of GDP)	-9.4	-4.6	-10.7	-19.2	-

Source: IMF - World Economic Outlook Database - Last Available Data.

Note: (e) Estimated Data

Monetary Indicators	2008	2009	2010
Foreign Debt (million USD)	692	762	-
Bhutan Ngultrum (BTN) - Average Annual Exchange Rate For 1 USD	43.51	48.41	45.73

Source: World Bank - Last Available Data.

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Main Sectors of Industry

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	43.6	17.2	39.2
Value Added (in % of GDP)	17.6	45.0	37.4
Value Added (Annual % Change)	1.7	7.5	12.1