Asia Regional Integration Center

Growth continued to expand in fiscal year (FY) 2017 to 7.5% from 7.3% in previous year, with industry and services as the main drivers. Construction of two hydropower plants and other projects under the Five Year Plan 2013-2018 pushed growth of industry to 7.7%. Increases in fixed capital investment and consumption also lifted GDP growth. While inflation was higher and volatile in FY 2017, average inflation was 4.3%, caused by higher food prices imported from India and heavy monsoon rains.

For FY 2018, growth is seen moderating to 6.7% before picking up again to 7.1% in FY 2019. Boom in services mostly due to retail and wholesale businesses, as well as robust tourism growth will be the growth driver. While Bhutan had remarkable economic progress in recent year, this has not translate into creating enough jobs especially for the new entrants into the labor force. Increasing youth unemployment remains a policy concern.