Bhutan Economic Forecast

By: EconomyWatch Content Team   Date: 10 June 2010

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According to the World Bank, the UN, IMF, CIA World Factbook, and OECD, Bhutan’s economy is one of the smallest and least developed on the planet. People in this country depend on agriculture, fisheries, farming, and forestry, accounting for over 60% of work for the population. For the agriculture, fisheries, and farming sectors, most of this is subsistence and animal husbandry. While this part of the economy seems to hold its own, other factors of the country such as infrastructure, facilities, and transportation remain a challenge because of Bhutan being nestled among rugged mountains. In addition, Bhutan has a strong alliance with India specific to imports and exports, as well as monetary connections and dependency on aid from India. In fact, because of the expense and difficulty in developing transportation networks, Bhutan relies strongly on migrant workers from India to construct and build new transportation means. Even hydropower being exported to India has improved Bhutan’s Gross Domestic Product or GDP and this type of power is now responsible for economic growth and improved employment rates.

Bhutan GDP Forecast

While the economy of Bhutan is small, exports and revenues associated with a number of hydroelectric projects have helped. In the latter part of 2009, this country signed contracts with India for the development of four hydroelectric plants, which will take 10 years to complete. Bhutan and Bangladesh are also strong partners, which has helped the GDP forecast, along with the country being a member of the South Asian Free Trade Agreement and currently awaiting approval for membership to the World Trade Organization. The Bhutan GDP (Gross Domestic Product, Current Prices, US Dollar) for 2008 was at $1.23 billion in US Dollars. From that time to the end of 2009, an increase of 3.25% was experienced, which pushed the numbers to $1.269 billion. Professionals expect the GDP to increase by 10.09% by the end of 2010, taking the numbers to $1.40 billion. Then for close of 2015, numbers are expected to end at $2.054 billion, US dollars.

Bhutan Unemployment Forecast

The latest numbers for Bhutan population show the country has approximately 0.675 million people. While one of the smallest and least developed countries in the world, government initiatives are expected to help the workforce. Already, the economy has grown significantly in the past 10 years, which has helped to reduce poverty, improve standard of living, and increase national income. In fact, in 2007, the GDP averaged a 9.5% growth primarily because of the hydroelectric projects underway.

Bhutan Inflation Rate Forecast

Next, looking at the Bhutan inflation rate, 2009 ended at 8.7%, a 4.02% increase over numbers of 8.36% for 2008. Currently, forecasters are stating that change for the average consumer price will decline by 8.05% by the end of 2010, which would change numbers to 8.00%. However, forecasts being released for the close of 2015 show dramatic change with the inflation rate ending at 3.9%. The Bhutan unemployment rate will continue to rise. 

Bhutan Current Account Balance Forecast

For the Bhutan Current Account Balance forecast, we first need to look at how 2008 ended. At the end of that year, Bhutan was negative at $0.03 billion in US dollars. By 2009, the economy had experienced an astounding increase of 348.15%, taking the balance to a negative $0.121 billion. Now, for 2010, forecasts numbers show a reduction of 17.36%, which would change the account balance to a negative $0.10 billion. Five years down the road, forecasters believe that 2015 will result in an account balance of a negative $0.48 billion in United States dollars.


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