THIMPHU, May 3, 2024—Bhutan’s economy is on a path of robust growth despite facing challenges, as highlighted in the recent World Bank reports.
The April 2024 Bhutan Development Update revealed that the economy is expected to experience a 4.6 percent real GDP growth in FY22/23, with a further acceleration to 4.9 percent in FY23/24. Abdoulaye Seck, World Bank Country Director for Bangladesh and Bhutan, emphasized the importance of enabling the business environment to attract Foreign Direct Investments and promoting the private sector to create more jobs aligned with the aspirations of Bhutanese citizens.
Seck also pointed out the need for the government to address the strain on service delivery due to human resources challenges to sustain the growth momentum.
The reports also highlighted the need for Bhutan to diversify its revenue sources beyond the hydropower sector. Hoon Sahib Soh, World Bank Practice Manager for Macroeconomics, Trade & Investment for South Asia Region, suggested that enhancing direct tax contributions and improving the tax administration system could significantly boost Bhutan's revenue generation for development.
Adama Coulibaly, World Bank Resident Representative for Bhutan, emphasized the importance of managing investments, corporate governance, and financial reporting to enhance the performance of state enterprises and mitigate fiscal risks.
Despite the positive growth trajectory, Bhutan faces downside risks including fiscal deficit widening, declining international reserves, and challenges in the labor market. Efforts to improve public spending efficiency, enhance domestic resource mobilization, and address policy gaps in state enterprise management are crucial for sustaining Bhutan's economic progress.