Economy of Bhutan

Macro-economic trend

Bhutan's hydropower potential and its attraction for tourists are key resources. The Bhutanese Government has made some progress in expanding the nation's productive base and improving social welfare.

In 2010, Bhutan became the first country in the world to ban smoking and the selling of tobacco. In order to stamp out cross-border smuggling during the pandemic, a new Tobacco Control Rules and Regulations (TCRR) 2021 allowed the import, sales and consumption of tobacco products.

Membership of economic organisations and agreements

In terms of trade, Bhutan is a member of the South Asian Free Trade Area (SAFTA) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and the South Asia Subregional Economic Cooperation (SASEC). Bhutan is also a member of the pan-Asian Asia Cooperation Dialogue (ACD), and the Asian Development Bank.

Bhutan first applied to join the WTO in 1999 and as an applicant, was quickly granted observer status Beyond that, ascension proceedings at the WTO have been much delayed and periodically put on pause, largely stemming from concerns and considerations of the Bhutanese government itself. The Bhutanese government approved ascension to the WTO in April 2023, at least partly hastened by the country's upcoming graduation from the UN-defined 'least developed country (LDC) category. Under WTO rules and processes, ascent of a country with LDC status comes with some leniency in certain requirements, more relaxed timeframes for compliance, and additional support; so, whilst the loss of LDC status, as happened in December 2023, was a reflection of Bhutan's success and development progress, it also meant much further delay in WTO ascension (that is, ascent after the loss of LDC status) would make the journey through to full WTO member status even harder.

Modern economic resources

Since the early 2020s, Bhutan has adopted cryptocurrency, particularly Bitcoin, as a strategic economic resource. Facing declining tourism revenue, youth unemployment (which reached 19% in 2024), and a growing brain drain, the government began mining Bitcoin using surplus hydropower during high-flow summer months. By 2023, Bhutan had sold $100 million in cryptocurrency to double civil servant salaries, leading to a drop in resignations. As of April 2025, blockchain analysts estimate Bhutan's Bitcoin holdings at over $600 million; around 30% of its GDP. Mining is powered by the kingdom's carbon-negative hydropower and cool climate, aligning with its environmental values. Bhutan also plans to develop Gelephu Mindfulness City, a sustainable economic hub.

References

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References

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