Bhutan has made significant strides in reducing poverty, with rates dropping from 28% in 2017 to 11.6% in 2022, according to a new report by the World Bank. The report attributes this progress to economic growth, increased agricultural productivity, labor market changes, COVID-19 relief efforts, and remittances.
The Bhutan Poverty and Equity Assessment, created alongside the National Statistics Bureau of Bhutan, highlights that poverty is primarily a rural issue with 87% of those affected living outside urban areas. Despite a decrease in consumption-based inequality from 2017 to 2022, income inequality remains high. The report also notes that job creation has slowed recently as skilled workers leave the country.
“Bhutan has made remarkable progress over the past decades in significantly reducing poverty and nearly eliminating extreme poverty. The living standards of the people broadly improved, with better education, health and access to basic services,” stated Adama Coulibaly, World Bank Resident Representative for Bhutan. “Yet, the country is eager to sustain its poverty reduction gains and strengthen resilience as well as the future competitiveness of its economy.”
Although Bhutan's short-term outlook on poverty reduction is positive, ongoing challenges must be addressed for long-term sustainability. While rural areas have driven recent reductions in poverty levels, there are concerns about potential urban challenges.
“The country faces pressing challenges including its vulnerability to climate shocks, economic shocks and dependence on remittances which if not addressed will threaten to undermine Bhutan’s dramatic progress," said Alvin Etang Ndip, World Bank Senior Economist and author of the report. "Furthermore disparities in service quality and slow job growth particularly in high-productivity sectors pose challenges to sustain poverty reduction."
To tackle these issues effectively requires an increase in productivity along with creating more jobs for youth and women while enhancing climate resilience. According to Ndip: “The country’s future prosperity hinges on targeted policies that promote equitable growth and build resilience.”
Further details can be found at: http://www.worldbank.org/Bhutan