𝐁𝐡𝐮𝐭𝐚𝐧 𝐁𝐮𝐜𝐤𝐢𝐧𝐠 𝐒𝐨𝐮𝐭𝐡 𝐀𝐬𝐢𝐚’𝐬 𝐒𝐥𝐨𝐰𝐝𝐨𝐰𝐧 𝐰𝐢𝐭𝐡 𝐑𝐚𝐩𝐢𝐝 𝐆𝐫𝐨𝐰𝐭𝐡

…𝒔𝒕𝒓𝒐𝒏𝒈 𝑮𝑫𝑷 𝒆𝒙𝒑𝒂𝒏𝒔𝒊𝒐𝒏 𝒄𝒐𝒏𝒕𝒓𝒂𝒔𝒕𝒔 𝒘𝒊𝒕𝒉 𝒓𝒊𝒔𝒊𝒏𝒈 𝒚𝒐𝒖𝒕𝒉 𝒖𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒎𝒆𝒏𝒕 𝒂𝒏𝒅 𝒔𝒕𝒓𝒖𝒄𝒕𝒖𝒓𝒂𝒍 𝒍𝒂𝒃𝒐𝒓 𝒄𝒉𝒂𝒍𝒍𝒆𝒏𝒈𝒆𝒔

By Yeshi Dolma

South Asia’s economic growth is slowing. The World Bank’s April 2025 South Asia Development Update projects regional growth to slip to 5.8 percent this year before recovering in 2026. Rising debt burdens, global uncertainty, and financial market volatility are creating challenges across the region.

Bhutan is an exception. The Himalayan kingdom is expected to grow by 8.55 percent in 2025, nearly three percentage points above the South Asian average. “The growth rate is significant given current global conditions,” said an economist familiar with Bhutan’s economy. The figure reflects a return to the long-term trajectory that has marked Bhutan’s past economic performance.

Despite this growth, unemployment among young people remains high and is expected to rise in the coming years. This combination of strong GDP growth and persistent youth unemployment raises questions about the inclusiveness of growth.

In 2024, Bhutan’s services sector, including tourism, retail, transport, and finance, led growth. Restaurants filled with tourists, banks expanded operations, and trade hubs became busier. In 2025, the focus is shifting. Industry, particularly construction and manufacturing, is projected to expand by 15.8 percent. Hydropower projects are progressing, infrastructure investment is increasing, and factories are reasserting their role in the economy. Agriculture continues to contribute modest gains.

“This transition from services to industry is typical for developing economies,” said a policy analyst. “It shows efforts to build long-term productive capacity.” Roads, dams, industrial plants, and housing projects boost GDP and provide foundations for future growth. The challenge is whether these projects will create opportunities for young people entering the labor market.

Overall unemployment is projected at 2.9 percent in 2025, approaching what economists call the natural rate. Yet youth unemployment is expected to reach 17.9 percent this year and rise above 20 percent in 2026 and 2027. “This disconnect reflects structural issues in the labor market,” said a labor economist. The jobs created are largely blue-collar roles in construction and manufacturing, including masons, electricians, machine operators, and assembly line workers. Professional positions in engineering, project management, administration, and technical work exist but are limited. Many educated young people find that available jobs do not match their skills.

Inflation has moderated to around 3.65 percent, mainly because of falling food prices, but urban living costs remain high. GDP per capita is expected to increase from $3,833 in 2022 to $5,483 in 2026. While the economy is creating wealth, benefits are not evenly distributed. If youth unemployment continues, established workers may capture a larger share, increasing generational inequality. Much of Bhutan’s industrial growth depends on hydropower construction funded by external borrowing. Public debt exceeds 100 percent of GDP. Relying on a single sector makes the economy vulnerable to delays, financing issues, or changes in regional demand.

Policymakers are focusing on diversification. They aim to expand tourism, develop niche manufacturing, and encourage private sector investment. Achieving these goals requires investment, regulatory reforms, skill development, and better alignment between education and labor market needs. South Asia’s slowdown reduces labor migration, trade spillovers, and investment, making Bhutan’s performance notable. If youth unemployment is not addressed, the growth advantage could be temporary. Economies that grow without creating inclusive jobs risk social dissatisfaction and loss of human capital.

Experts say Bhutan can turn growth into sustainable opportunities by diversifying the economy, aligning education and vocational training with labor market needs, promoting entrepreneurship, managing debt and hydropower projects carefully, and ensuring fair wages and social support. These steps can help the country ensure that economic growth leads to meaningful employment for young people.

Bhutan’s trajectory is clear: rapid growth, a shift from services to industry, and continued reliance on hydropower. The challenge is aligning growth with the needs of young people. Without reforms in education, vocational training, and labor policies, the country risks leaving a generation unable to fully participate in its transformation. Youth represent the future workforce, entrepreneurs, and taxpayers. If they are left behind, long-term growth sustainability is weakened. The contrast between fast growth and high youth unemployment shows that GDP alone does not fully measure economic health. What matters is whether growth provides accessible and meaningful opportunities for all citizens, especially the young.