Thimphu, May 26, 2025—Bhutan is set to record the highest growth rate in South Asia for the fiscal year 2024/25, according to the World Bank's annual update released today. The Bhutan Development Update highlights recent economic developments and projects a robust medium-term outlook with a special focus on migration.
In the fiscal year 2023/24, Bhutan's real GDP grew by 4.9 percent, primarily driven by the service sector, including tourism and related services, financing, insurance, and real estate. Industry growth was supported by strong performance in mining and quarrying. However, agriculture saw modest growth due to challenges like climate change impacts and wildlife-related crop damage. Non-hydropower exports and consumption were key drivers of demand-side growth.
Cecile Fruman, The World Bank Acting Country Director for Bhutan stated: “The World Bank remains committed to helping Bhutan achieve its growth aspirations. We are helping Bhutan to create more and better jobs to make it attractive for youth to remain and thrive in the country."
Despite recovery to pre-COVID unemployment levels nationally, youth unemployment stood at 17.7 percent in late 2024. Remittances from expatriate Bhutanese reached record highs in 2024, aiding foreign reserves amidst low foreign direct investment levels averaging only 0.3 percent of GDP from 2021-2023. Fiscal deficit dropped significantly from 4.7 percent of GDP in FY22/23 to 0.2 percent of GDP in FY23/24.
Inflation has been contained with a decline from 7.4 percent in 2021 to 2.8 percent in 2024 due to non-food item disinflation; however, food inflation remained high influenced by Indian food prices as around 70 percent of Bhutan’s imports come from India.
Real GDP is expected to accelerate further due to new hydropower projects reaching completion. Economic projections show acceleration to a growth rate of 6.6 percent in FY24/25 and further reaching up to 7.6 percent in FY25/26 supported by construction and commissioning of these plants along with growth across non-hydropower exports, service sectors, and public investments.
Yumeka Hirano, The World Bank Economist noted: “To maintain its strong growth trajectory, Bhutan would need to take reform measures... These measures include strengthening economic management... improving the business environment for private sector development..."
Post COVID-19 emigration raised concerns over service delivery disruptions and 'brain drain' among youth and skilled professionals but offers strategic opportunities through diaspora contributions.
For more detailed information on Bhutan's economic outlook or related topics visit [World Bank's official page](https://www.worldbank.org/en/country/bhutan).