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 $566.45 million.

Bhutan: SASEC Projects
Source: SASEC Project Portfolio, as of October 2019

Source: SASEC Project Portfolio, as of October 2019

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 $12.45 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 2020, is captured in the tables below.

Bhutan's top import source worldwide is India, with imported goods valued at over $2.5 billion. Nepal, ranking 6th worldwide, and Bangladesh, ranking 5th, exported goods to Bhutan valued at $10 million and $5 million respectively.

Bhutan's top export destination is India, with exported goods from Bhutan valued at $496 million. Bangladesh and Nepal rank 4th and 5th, respectively, with exported goods from Bhutan valued at $5 million and $4 million.

Bhutan Trade in SASEC Subregion

Source: IMF Direction of Trade Statistics, as of October 2020

Bhutan Trade - Import

Source: IMF Direction of Trade Statistics, as of October 2020

Bhutan Trade - Export

Source: IMF Direction of Trade Statistics, as of October 2020

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

Growth is forecast to reach 5.2% in fiscal year (FY) 2020 on increased hydropower capacity and a predicted rise in government spending to offset the coronavirus pandemic's negative impact. Should the pandemic remain protracted, effects may spill over beyond the tourism sector. Inflation is expected to remain benign at 3.8% in FY2020.

Source: Asian Development Outlook 2020 (ADB)
South Asia Economic Focus

Though Bhutan is successfully fighting the coronavirus (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 FY2020-2021 is projected to contract by 1.2%. The economy is expected to gradually recover in FY2021-2022 as economic activity resumes.

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