Bhutan is a founding member of the SASEC Program, joining with Bangladesh, India, and Nepal in 2001 to form this project-based partnership. Maldives and Sri Lanka became full members of SASEC in May 2014, following several years as active observers.

Bhutan's Twelfth Five Year Plan for 2018–2023 envisions a just, harmonious, and sustainable society through enhanced decentralization. The plan highlights priorities to reduce poverty and inequality and ensure renewable energy supply. The plan also intends to enhance cooperation with other countries and strengthen engagement in international and regional frameworks.

SASEC Projects in Bhutan

Since 2003, the Government of Bhutan has signed nine ADB-financed SASEC investment projects worth more than $665 million.

Bhutan: SASEC Projects
Source: SASEC Project Portfolio, as of March 2022

Source: SASEC Project Portfolio, as of March 2022

In addition to projects, ADB-financed technical assistance has supported SASEC investment projects in Bhutan, regional cooperation forums and knowledge-sharing initiatives, and pilot projects since 2001. A total of 11 national technical assistance projects (cumulative worth of over $11.9 million) have assisted Bhutan in project preparation, strategic planning, and capacity building.

Trade Snapshot

Direction of Intra-regional Trade

The value of Bhutan's merchandise exports and imports trade with other SASEC member countries, using International Monetary Fund data from 2022, is captured in the tables below.

Bhutan's top import source worldwide is India, with imported goods valued at over $2.2 billion. Nepal, ranking 8th worldwide, exported goods to Bhutan worth $16 million while Bangladesh, ranking 12th, exported goods to Bhutan valued at $5 million.

Bhutan's top export destination is India, with exported goods from Bhutan valued at $34 million. Bangladesh ranks 3rd with exported goods from Bhutan valued at $2 million. Nepal ranks 4th, with exported goods from Bhutan valued at $2 million.

Bhutan Trade - Import

Source: IMF Direction of Trade Statistics, accessed May 2022

Bhutan Trade - Export

Source: IMF Direction of Trade Statistics, accessed May 2022

Logistics Performance Index (LPI)

Bhutan registered an overall LPI score of 2.17 in 2018, below the South Asia regional average score of 2.51. Bhutan registered improved scores in logistics competence and tracking and tracing (both at 2.35), resulting in an overall 2018 rank of 149 out of 168 economies. The country's best score is in timeliness at 2.49.

Bhutan LPI 2018

Source: World Bank LPI (accessed December 2018)

Note: The LPI overall score reflects perceptions of a country's logistics based on six core dimensions: (i) efficiency of customs clearance process, (ii) quality of trade- and transport-related infrastructure, (iii) ease of arranging competitively priced shipments, (iv) quality of logistics services, (v) ability to track and trace consignments, and (vi) frequency with which shipments reach the consignee within the scheduled time. The scores for the six areas are averaged across all respondents and aggregated to a single score using principal components analysis. A higher score indicates better performance.

Economic Outlook

Asian Development Outlook

Bhutan's gross domestic product in fiscal year (FY) 2021 is estimated to have contracted by 3.4%, due to an economic slowdown associated with measures to contain the global coronavirus (COVID-19) pandemic. Services contracted due to a freeze on international tourism while industry experienced a slowdown following slumps in manufacturing and construction. Growth is forecast to rebound to 3.7% in FY2022 as government scales up capital spending and as the nationwide vaccination drive restores mobility and economic activity. Inflation is projected at 5.6% for FY2021 and 5.8% for FY2022.

Source: Asian Development Outlook 2021 Update (ADB)
South Asia Economic Focus

Though Bhutan has been successfully fighting the COVID-19 pandemic, the pandemic still disrupted tourism and the industrial sector. Construction and manufacturing was severely affected, though the hydropower sector supported growth. COVID-19 containment measures caused incomes to shrink along with private consumption. Output in Bhutan in FY2021 is projected to contract by 1.2%. The economy is expected to gradually recover in FY2022 as economic activity resumes.

Source: South Asia Economic Focus, Fall 2021 (WB)