𝐁𝐡𝐮𝐭𝐚𝐧 𝐒𝐞𝐭 𝐓𝐨 𝐋𝐞𝐚𝐝 𝐒𝐨𝐮𝐭𝐡 𝐀𝐬𝐢𝐚’𝐬 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐆𝐫𝐨𝐰𝐭𝐡 𝐓𝐡𝐫𝐨𝐮𝐠𝐡 𝐇𝐲𝐝𝐫𝐨𝐩𝐨𝐰𝐞𝐫 𝐀𝐧𝐝 𝐓𝐨𝐮𝐫𝐢𝐬𝐦

…𝑩𝒉𝒖𝒕𝒂𝒏’𝒔 𝒓𝒐𝒃𝒖𝒔𝒕 𝒆𝒏𝒆𝒓𝒈𝒚 𝒈𝒆𝒏𝒆𝒓𝒂𝒕𝒊𝒐𝒏 𝒂𝒏𝒅 𝒕𝒐𝒖𝒓𝒊𝒔𝒎 𝒓𝒆𝒄𝒐𝒗𝒆𝒓𝒚 𝒑𝒐𝒔𝒊𝒕𝒊𝒐𝒏 𝒕𝒉𝒆 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝒂𝒔 𝒕𝒉𝒆 𝒇𝒂𝒔𝒕𝒆𝒔𝒕-𝒈𝒓𝒐𝒘𝒊𝒏𝒈 𝒆𝒄𝒐𝒏𝒐𝒎𝒚 𝒊𝒏 𝒕𝒉𝒆 𝒓𝒆𝒈𝒊𝒐𝒏 𝒂𝒎𝒊𝒅 𝒈𝒍𝒐𝒃𝒂𝒍 𝒖𝒏𝒄𝒆𝒓𝒕𝒂𝒊𝒏𝒕𝒊𝒆𝒔

By Kezang Choden

Bhutan is set to emerge as the fastest-growing economy in South Asia, with the World Bank projecting growth to rise from 7.0 percent in 2025 to 7.3 percent in 2026. The strong performance is attributed to increased hydropower generation, a gradual revival of tourism, and greater private sector participation in emerging industries.

The World Bank has projected that South Asia’s economic growth will ease from 6.6 percent in 2025 to 5.8 percent in 2026, as countries across the region continue to face global uncertainties, climate challenges, and structural economic constraints. India, the region’s largest economy, is expected to maintain steady growth of 6.5 percent in both 2025 and 2026, supported by resilient domestic consumption, infrastructure investments, and growth in technology and manufacturing. Bangladesh’s growth is projected to improve moderately from 4.0 percent in 2025 to 4.8 percent in 2026, although inflation and a slow export recovery remain key concerns.

The Maldives is expected to experience a slight slowdown, with growth declining from 4.2 percent in 2025 to 3.9 percent in 2026, as the tourism-driven economy faces weaker global demand and rising operational costs. Sri Lanka is projected to grow by 4.6 percent in 2025 before easing to 3.5 percent in 2026 amid ongoing debt restructuring and fiscal tightening measures. Meanwhile, Nepal faces one of the most significant downturns in the region, with growth expected to fall sharply from 4.6 percent in 2025 to 2.1 percent in 2026. The slowdown is linked to subdued investment, reduced remittance inflows, and persistent challenges in key sectors such as construction and manufacturing. Despite the anticipated decline, South Asia remains one of the fastest-growing regions globally. The World Bank has urged governments to strengthen policy reforms, promote private sector growth, and invest in climate resilience to sustain long-term economic stability.

During the 21 Meet the Press session, the Ministry of Energy and Natural Resources reported that Bhutan’s major hydropower plants are running smoothly, ensuring a stable power supply across the nation. The Chhukha, Tala, and Basochhu hydropower plants are currently operating at their full capacity, reflecting optimal water flow and efficient operation. The Kurichhu Hydropower Plant is generating 66 megawatts (MW) of electricity, while the Mangdechhu project continues to perform steadily, producing 510 MW. In contrast, the Nikachhu plant has only one unit in operation at present, generating 10 MW. Meanwhile, Punatsangchhu-II, one of the country’s key power projects, has four out of its six units operational. The plant is contributing significantly to the national grid with a total generation of 650 MW. The remaining two units are expected to be brought online after necessary testing and system synchronisation.

In addition, the newly commissioned Suchhu hydropower plant, which was synchronised, has begun generating 10 MW. Officials stated that the successful synchronisation of Suchhu marks another step forward in Bhutan’s commitment to harnessing clean energy and strengthening energy security. The Ministry highlighted that consistent rainfall and improved river flow have supported steady generation this season. Bhutan continues to maintain its position as a key exporter of clean and renewable hydropower to neighbouring regions, reinforcing the country’s vision of sustainable energy development.

The restoration work at the 126 MW Dagachhu Hydropower Plant is currently in progress following the failure of the slope at the Head Race Channel. Efforts are underway to re-establish slope stability through the construction of riprap along the toe of the affected slope. According to project officials, once the slope has been stabilized, repair work on the Head Race Channel will begin. Druk Green Consultancy is presently reviewing an appropriate design to ensure long-term slope stability and prevent future failures. The timeline for the full restoration of the hydropower plant will be determined only after the stabilization process is completed. Meanwhile, to closely monitor the slope movement, the Hydropower Research and Development Center is conducting continuous 3D surveys twice a day. The Dagachhu Hydropower Plant, a key contributor to Bhutan’s power generation capacity, remains under careful observation as engineers and specialists work toward restoring its full operational capacity.

The government has completed its review of the tourism policy, including the Sustainable Development Fee (SDF) structure, regulations, and targeted incentives, according to the Ministry of Industry, Commerce and Employment. The Ministry has already submitted its recommendations to the Cabinet for approval, focusing on measures to increase the length of stay and encourage travel to lesser-visited dzongkhags. The Ministry stated that these proposals are the result of more than a year of research and extensive consultations. The reforms aim to support tourism recovery while safeguarding Bhutan’s “High-Value, Low-Volume” brand. Once the Cabinet’s decision is received, the Ministry said it will move swiftly to implement the approved measures.

Over recent months, the Ministry and the Bhutan Innovation Lab (BIL) have undertaken a comprehensive review of the tourism sector. Their findings indicate that Bhutan’s tourism ambitions now extend beyond the Department of Tourism’s regulatory and marketing mandate. To address broader structural issues, the government will soon establish a time-bound, Prime Minister-chaired Tourism Mission Board (TMB), which will meet monthly from December 2025 through December 2026 to coordinate and drive reforms across agencies.

The Mission Board will focus on addressing key issues such as hotel credit, service standardization, financial plough-back mechanisms, and tourism data transformation. It will also ensure coordination across economic, cultural, environmental, infrastructural, and foreign affairs sectors to maximize tourism’s multiplier effects. Early priorities will include enhancing marketing and quality assurance, developing critical tourism infrastructure, introducing non-monetary incentives to complement the SDF, and aligning financial policies to ease hotel loan distress.

On the marketing front, the Department of Tourism has intensified efforts to rebuild Bhutan’s visibility in both regional and international markets. Between July and October 2025, Nu. 17.8 million was invested in targeted campaigns and promotional activities. These included international media collaborations and familiarization trips for editors and influencers from India, Singapore, Japan, Australia, and Korea, which resulted in rich media coverage and digital content showcasing Bhutan’s diverse experiences. Bhutan also participated in major tourism fairs and roadshows in India, Vietnam, Japan, and Korea, as well as cultural events such as Bhutan Culture Day in Seoul and Busan, along with preparations for the Osaka Expo 2025. Digital campaigns like Bhutan 365 and It is Easy to Visit Bhutan were launched to promote Bhutan as a year-round destination, emphasizing simplified processes and improved flight connectivity, including the new Dubai direct route. Familiarization trips were also organized to lesser-visited dzongkhags such as Pema Gatshel and the eastern circuit to promote itinerary diversification and equitable distribution of tourism benefits.

The Ministry reported that Bhutan’s tourism sector is witnessing steady recovery. From January to October this year, the country recorded a total of 161,440 tourist arrivals, giving the government confidence in its ongoing initiatives. “Yet, our potential is much greater,” the Ministry noted. “This is why the government is introducing mechanisms like the Tourism Mission Board to maximize the benefits of tourism not only in income generation but also in job creation, regional equity, and cultural preservation.” The Ministry emphasized that the sector is not underperforming but rather evolving toward unlocking its full capacity to drive growth, innovation, and community-level prosperity. The government reaffirmed its commitment to ensuring that tourism continues to serve as a cornerstone of Bhutan’s sustainable and inclusive economy.