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Bhutan

How does Bhutan’s Economy Look?

Tenzin Lhaden's picture
Bhutan Economic Update
Bhutan has maintained solid economic performance to date in 2017 but delays in hydropower construction may affect its economic outlook with growth expected to slow to just under 7 percent in 2018. 

Bhutan is one of the smallest, but fastest-growing economies in the world. Its annual economic growth of 7.5 percent on average between 2006 and 2015, placed the country 13th of 118 countries, compared to the average global growth rate of 4.4 percent.

This growth has been shared by a majority of Bhutanese, with extreme poverty dropping from 25 percent in 2003 to 2 percent in 2012, based on the international poverty line of $1.90 a day (at purchasing power parity). This is among the rate in South Asia and compares favourably to the regional poverty rate of 19 percent. Equally impressive improvements were made in access to basic services such as health, education and asset ownership.

The recent developments on strong lending growth, inflation, exchange rates and international reserves show that Bhutan maintains a solid and stable growth in the first half of 2017. Gross international reserves have been increasing since 2012, when the country experienced an Indian rupee shortage. Reserves exceed $1 billion, equivalent to 10 months of imports of goods and services in mid-2017 which makes the country more resilient to potential shocks. This is also very much in line with the requirement spelled in the 2008 Constitution which outlines minimum reserve requirements. The Bhutanese ngultrum, pegged to the Indian rupee, have been stable or slightly appreciating against the U.S. dollar.

Despite recent solid growth and macroeconomic stability, we need to carefully monitor its Development. According to the latest Bhutan Economic Update, the hydropower construction and the implementation of the 2016 Economic Development Policy are expected to support this solid growth during the next few years. However, with confirmed delays in the completion of two hydropower projects, the contribution of the hydropower sector to growth will be lower than the originally projected. Therefore, the World Bank revised down its growth forecasts in 2019/20 by a few percentage points to 7.6 percent, still among the fastest in the world.

How a parking project in Bhutan contributes to Gross National Happiness

Adele Paris's picture
Photo by Flickr user Khaled Monsoor

In Bhutan, the only country that measures success on a scale of Gross National Happiness (GNH), government officials actively research ways to make residents’ lives happier. So when it became apparent that the growing number of vehicles in Thimphu, the capital city, was increasing traffic congestion and causing intense frustration among locals, the authorities started looking for a solution to restore contentment among its citizens.

Unlocking the transformative power of waterways

Karla Gonzalez Carvajal's picture


Transport history was in the making a few days ago when a Bangladeshi ship carried a consignment of
1,000 tons of steel and iron sheets from the Port of Kolkata in West Bengal to India’s northeastern states, through Bangladesh. This first-ever transshipment of transit goods marked the formal launch of transit trade and transport between India and Bangladesh using a combination of river and land routes. 
 
Senior government officials and top diplomats from both countries, including the Indian High Commissioner in Dhaka, the Bangladesh Minister and Secretary of Shipping, the Senior Secretary of Commerce, and officials of the Bangladesh Inland Water Transport Authority, attended an inaugural ceremony to observe the unloading of goods at Ashuganj Port on the bank of the Meghna River, according to media reports. The general cargo terminal at Ashuganj Port will be rehabilitated and modernized under the newly approved regional IDA project to support Bangladesh’s waterways to handle the loading and unloading of large volumes of cargo.

Bhutan: Connectivity in the Cloud(s)

Charles Kunaka's picture

Bhutan has some of the most thrilling rides in the world—in the air and on the ground.
 
Flying into Paro Airport, the only international airport in Bhutan, is an experience like none other—its narrow runway tucked between rugged 18,000-foot peaks, high in the Himalayas. Below, the road between Thimphu, the capital, and the border city of Phuentsholing twists and turns as it navigates some of the world’s highest mountain passes, often blanketed in fog with visibility reduced to mere meters. On clear days, both offer some of the most stunning, breathtaking views you will ever see.
 
But stunning peaks do not make for easy trade routes, and this is a problem in Bhutan. That’s why the World Bank’s International Trade Unit teamed up with the South Asia Transport Unit to conduct a diagnostic of impediments to transport and trade facilitation in Bhutan.  The diagnostic, a prelude to a potential investment operation, was based on the recently released Trade and Transport Corridor Management Toolkit.