The GDP per capita in Bhutan was last recorded at $2751.20 in 2016. It had increased by 6.50% in 2016 as compared to the previous year. The GDP per capita in Bhutan is equivalent to 22% of the world’s average. GDP per capita in Bhutan averaged at $1288.84 from 1980 till 2016 and reached an all-time high of $2751.20 in 2016.
Bhutan’s economy, one of the smallest in the world, has been growing consistently in recent years. Bhutan’s overall development strategy is assessed according to the expected impact on the Gross National Happiness Index. The main sectors of the economy are hydroelectricity, tourism and agriculture. The government has focused on the development of low volume and high quality tourism as a way to protect the environment. Bhutan maintains close trading ties with India. Electricity sales to India account for the country’s largest share of foreign currency earnings.
Export and Import
Bhutan is the 175th largest export economy in the world. In 2015, Bhutan exported goods worth $214 million and imported goods worth $465 million, resulting in a negative trade balance of $251 million. In 2015, the GDP of Bhutan was $2.06 billion and its GDP per capita was $8.37 thousand.
The top exports of Bhutan are ferroalloys ($106 million), electricity ($36.5 million), carbides ($24.7million), raw plastic sheeting ($8.73million), and hydrogen ($6.81million). Its top imports are refined petroleum ($72.3million), planes, helicopters, cars ($42.6 million), forging machines ($22.1million), and iron structures ($12.7 million).
The top export destinations of Bhutan are India ($183million), Germany ($9.2million), France ($4.33million), Italy ($3.55million) and the United States ($3.16 million). The top import origins are India ($333million), Germany ($60.2million), Japan ($15.3million), Thailand ($11.3million) and Singapore ($10.9million).
In 2015, Bhutan imported goods worth $465 million, making it the 181st largest importer in the world. During the last five years, the imports of Bhutan have decreased at an annualised rate of -9.5%, from $787 million in 2010 to $465 million in 2015. The most recent imports are led by refined petroleum which represents 15.5% of the total imports of Bhutan.
Bilateral relations between Bhutan and India have been traditionally close and both countries share a special relationship. India retains influence over Bhutan’s foreign policy, defence and commerce. In 2012–13 fiscal, India’s budgetary support to Bhutan stood at $600 million. It steadily rose to reach $985 million in 2015-16, making Bhutan the largest beneficiary of India’s foreign aid. Electricity accounts for one-third of Bhutan’s export to India. Other items of export include minerals such as ferro-silica, cement and dolomite. Recently, there has been growing exports of cardamom and Bhutan is also keen to sell off-season vegetables in neighbouring Indian markets.
Economic exchange between Bhutan and Pakistan is minimal, owing to high freight rates and difficulties of access. Major exports from Pakistan are cotton yarn, articles of textile materials, cotton fabric (woven), sports goods and leather. Imports by Pakistan include raw jute, crude rubber, oil seeds, cork and chemical products.
The growth of trade between Bhutan and Nepal has been affected by the refugee crisis. In 2008-09, Bhutan’s exports to Nepal stood at `300 million, while Nepal’s exports to Bhutan amounted to `200 million.
Bhutan and Bangladesh have friendly bilateral trade ties. Bhutan has exempted import duty on 90 products from Bangladesh while Bangladesh has exempted import duty on 18 products from Bhutan. Bangladesh has also offered to export more products such as readymade garments, ceramics, pharmaceuticals, jute and allied products, leather goods, toiletries and agricultural produce to Bhutan. In 2016, Bhutan exported goods worth Nu 2.3billion to Bangladesh and imported goods worth Nu 268 million.
Bhutan and Sri Lanka have recently stressed the importance of forging institutional linkages between various agencies. They have envisioned closer cooperation between their parliaments, educational institutions and chambers of
The share of FDI in the GDP of Bhutan remains relatively low compared to other developing countries. In terms of stock, FDI represents less than 10% of GDP. According to the UNCTAD, World Investment Report 2017, in 2016, FDI influx was outpaced by divestment, resulting in a negative inflow of $12.5 million. The topography and limited infrastructure limits investment in Bhutan. In addition, FDI development is limited by a substantially controlled economic system and inadequate policies in areas of industrial licence, trade, work and finance. A railway project linking Bhutan to West Bengal (India) has been planned and it could help to increase the FDI inflows and accentuate trade.
The Bhutan government plans to restrict FDI in certain sectors in order to protect local traders.
In 2014, Bhutan welcomed 133,480 foreign visitors. Seeking to become a high value destination, it imposes a daily fee of $250 on tourists that covers touring and hotel accommodation. The industry employs 21,000 people and accounts for 1.8% of GDP.
Agriculture remains crucially important in Bhutan as it employs 56% of the workforce and is the main source of income in rural Bhutan. The challenge is to improve the sector in order to achieve an inclusive growth for the economy. The country is a major tourist destination. However, Bhutan is yet to achieve the infrastructure that is needed for it to be accounted as a global tourist destination. Connectivity remains a crucial problem.