Bhutan maintains strong economic ties with India, both in trade and financial support.

Bhutan’s economy is primarily based on agriculture, forestry, and hydropower. More than half of the population still relies on agriculture mostly subsistence farming and animal husbandry for their livelihoods. Forestry also plays a crucial role due to the country’s rugged, mountainous landscape, which makes large-scale industrialization challenging.

Hydropower is a major economic driver, with much of the electricity produced exported to neighboring India. This sector is critical for Bhutan’s GDP growth and is supported by ongoing development projects such as the commissioning of the Punasangchu II hydropower plant. The service sector, especially tourism, has grown steadily in recent years and is seen as a key avenue for diversification. The government encourages “high value, low impact” tourism to protect Bhutan’s unique environment and culture.

The country has seen consistent economic growth with projections of 8.5% GDP growth in 2025 thanks in large part to the recovery in tourism post-pandemic and continued investment in hydropower and mining. However, significant portions of the population remain vulnerable to poverty, especially those affected by natural hazards.

Bhutan maintains strong economic ties with India, both in trade and financial support. The economy is classified as lower-middle income, with GDP per capita about $3,718 as of 2024. Bhutan’s unique development philosophy emphasizes Gross National Happiness (GNH) over purely economic measures, reflecting a holistic approach to progress that seeks to balance material and spiritual well-being.

Key points:

• Main sectors: agriculture, forestry, hydropower, and tourism.

• GDP per capita (2024): about $3,718.

• Projected GDP growth: 8.5% in 2025.

• Close economic ties with India.

• Emphasis on Gross National Happiness alongside GDP.

• Still significant poverty and vulnerability to natural disasters, though extreme poverty is almost eliminated.