In a few decades of development, Bhutan has turned from an agrarian society to a modern trading economy. The country is increasing its regional and global economic ties and presence. Its GDP per capita in 2013 was more than US$ 2,300 (NSB, 2013). This is one of the highest rates in South Asia. The economy grew at an average of 6.7 percent (2009-2013). The Economist (2013) ranked Bhutan among the top five fast growing economies in the world. The GDP growth rate is expected to spike when two mega-hydropower projects commission in a few years time.
Agriculture (including horticulture and livestock) remains the mainstay of livelihood for more than 60 percent of the people. However, the share of agriculture to GDP has been declining over the years. Its contribution to GDP was on average 16 percent (2009-2013). It stays largely as subsistence agriculture.
A large share of contribution to GDP comes from hydropower, tourism, manufacturing (8.2 percent, 2012) and construction (14 percent, 2012) sectors.
Bhutan’s estimated hydropower generation potential is about 30,000 MW of electricity. Currently, 5 percent of this vast potential is harnessed. Hydropower projects are preferred due to its eco-friendly nature. It does not involve construction of large dams and mass displacement of human settlements. The hydropower sector has largely driven the economic growth; but there is a risk of putting ‘all eggs in one basket’. The government has recognized the broad-based development as crucial.
Tourism is another important source of foreign currency. The tourism revenue grew from US$ 31.9 million in 2009 to US$ 63.5 in 2013. Bhutan continues to attract tourists despite popular belief that tariff is high. It has been ranked as the fourth top tourist destination in the world (Wanderlust, 2013).
The manufacturing sector in Bhutan is small. It is mainly based on agro and mineral industries. The main products are processed food, cement, Ferro silicon, calcium carbide, and finished woods.
Bhutan has evolved from a closed economy to a trading nation. The volume of its international trade has increased significantly. Trade is heavily concentrated in the SAARC region. India remains the largest trading partner. The exports to India are electricity, cement, wood products, minerals, alcohol and cash crops. The imports are petroleum products, rice, automobile and spares, machinery and fabrics.
Bangladesh, Thailand, Singapore and Nepal are other key trading partners. The country is currently a member of South Asian Free Trade Area Agreement (SAFTA) and BIMSTEC and its accession to the WTO is at an advanced stage.
GNH guides the economic policies and programmes. The effort is made to maintain a balance between economic growth, cultural heritage and natural environment.