Resilient Growth Amid Global Pressures: Bhutan’s Economic Outlook
Imported from official source
Announcement
Tourism: Bhutan recorded 258,232 visitors in FY 2025-26. Momentum will carry into FY 2026-27 via improved regional connectivity. While regional traffic remains steady, arrivals from major high-value source markets in Europe and the Americas are being monitored closely alongside geopolitical risk factors
Electricity: Monsoon generation reached 3,873.45 GWh in Q4 (+7% year-on-year) and is projected to peak at around 7,638 GWh in Q1 FY 2026-27, subject to hydrology and climate risks such as El Nino.
Employment: Labour market conditions remain supportive, with 3,640 jobs created during the first half of 2026, reflecting continued demand for workers as economic activity strengthened.
Fiscal Deficit: Estimated at 0.38% of GDP for FY 2025-26. The fiscal deficit is projected at 6.41% in FY 2026-27 due to capital investments and tax reforms. Cumulative 13th FYP deficit remains anchored near the 3% GDP target.
Public Debt: 105.2% of GDP in June 2026, total public debt is projected to drop further to 102.23% in FY 2026-27 (largely hydropower-driven).
Inflation: Inflation averaged 6.45% in the second half of FY 2025-26 and is projected to remain elevated at around 7% in the first quarter of FY 2026-27 as a result of continued global headwinds.
Credit: Credit is expected to continue supporting economic activity in FY 2026-27, although growth is projected to moderate to 7% as the economy moves into a new investment cycle. Housing, hotels and tourism, and manufacturing which account for around 55% of total credit are expected to remain the main drivers of lending.
Liquidity: Banking-sector liquidity is expected to remain adequate to support economic activity, projected to moderate from Nu. 19.1 billion in FY2025-26 to Nu. 7.3 billion in FY 2026-27. The decline partly reflects higher precautionary liquidity buffers being maintained to meet the banking system’s funding and payment needs.
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