𝐌𝐚𝐣𝐨𝐫 𝐇𝐲𝐝𝐫𝐨𝐩𝐨𝐰𝐞𝐫 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬 𝐊𝐞𝐞𝐩 𝐁𝐡𝐮𝐭𝐚𝐧 𝐎𝐧 𝐒𝐭𝐚𝐛𝐥𝐞 𝐆𝐫𝐨𝐰𝐭𝐡 𝐏𝐚𝐭𝐡

… 𝐒𝐨𝐮𝐭𝐡 𝐀𝐬𝐢𝐚 𝐠𝐫𝐨𝐰𝐬 𝐚𝐭 𝟕.𝟏 𝐩𝐞𝐫𝐜𝐞𝐧𝐭 𝐢𝐧 𝟐𝟎𝟐𝟓 𝐰𝐡𝐢𝐥𝐞 𝐁𝐡𝐮𝐭𝐚𝐧 𝐛𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐟𝐫𝐨𝐦 𝐧𝐞𝐰 𝐞𝐧𝐞𝐫𝐠𝐲 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬 𝐝𝐞𝐬𝐩𝐢𝐭𝐞 𝐰𝐢𝐝𝐞𝐫 𝐫𝐞𝐠𝐢𝐨𝐧𝐚𝐥 𝐮𝐧𝐜𝐞𝐫𝐭𝐚𝐢𝐧𝐭𝐲

By Kezang Choden

South Asia’s economy is estimated to have expanded by 7.1 percent in 2025, largely supported
by strong performance in India, which helped cushion the region from rising trade tensions and
global policy uncertainty. Within this broader regional outlook, Bhutan stands out for
maintaining steady economic growth, driven primarily by continued progress in its hydropower
sector.

Economic activity in Bhutan has been supported by the commissioning of a new hydropower
plant and the ongoing construction of additional power projects. These developments have
strengthened domestic production, improved energy supply, and reinforced Bhutan’s role as a
clean energy exporter in the region. Hydropower remains a key pillar of the country’s economy,
providing stable revenue, employment opportunities, and long term growth prospects.

While growth across South Asia excluding India remained broadly stable in 2025, several
countries in the region faced challenges linked to political uncertainty and weak investment. In
contrast, Bhutan’s outlook remains positive. Growth is expected to continue benefiting from
hydropower construction and commissioning in the coming years, even as regional growth is
projected to slow to 6.2 percent in 2026 before recovering in 2027.

India’s projected slowdown, partly due to higher United States import tariffs, is expected to
weigh on regional growth. However, Bhutan is less exposed to these trade pressures and is likely
to remain resilient, supported by sustained domestic investment in energy infrastructure. Risks to
the regional outlook include tighter global financial conditions, increased trade restrictions,
political instability, and climate related disasters. Despite these challenges, Bhutan’s continued
focus on hydropower development positions the country relatively well within a region facing
growing uncertainty.

A major driver of Bhutan’s medium to long term growth outlook is the 1,125 megawatt
Dorjilung Hydroelectric Power Project on the Kurichhu River in eastern Bhutan. Once
operational, the project is expected to generate more than 4,500 gigawatt hours of clean
electricity each year, raising the country’s total energy production by about 40 percent and
increasing energy exports by 42 percent.

The project is expected to play a key role in closing Bhutan’s seasonal energy gap. It will reduce
the need for costly electricity imports during the winter months and allow surplus power
generated during the summer and monsoon seasons to be exported to India, when domestic
demand in Bhutan is lower. The additional revenue and savings from reduced imports are
expected to create fiscal space for increased social spending and further public investment,
directly benefiting the Bhutanese people. The project is also expected to strengthen long term
energy security and support Bhutan’s commitment to clean and renewable energy.

Dorjilung will be Bhutan’s largest hydropower project developed under a public private
partnership, marking a shift toward a more sustainable financing model for hydropower
development. This approach is expected to encourage greater private sector participation in the
energy sector. The World Bank Group has committed financing of 815 million US dollars for the
project, which is expected to mobilize around 900 million US dollars from private investors,
further reinforcing confidence in Bhutan’s hydropower potential.

“The Dorjilung Hydroelectric Power Project is a national priority and will be transformational
for Bhutan, delivering clean electricity, driving economic growth, and advancing our
commitment to remain carbon negative,” said Lyonpo Lekey Dorji, Minister of Finance.
“Its innovative financing structure ensures that the project does not place an undue burden on
public finances, allowing us to continue investing in our people.”

Beyond national level economic benefits, the project is expected to have significant local
impacts. It is projected to create thousands of jobs during both the construction and operation
phases, providing a major boost to local employment.

The project is also expected to stimulatelocal enterprises and support livelihoods in Mongar
and Lhuentse districts, which experience higher levels of poverty, unemployment, and out
migration compared to the national average. In addition, the project will lead to improvements
in road infrastructure, enhancing access to markets and essential services for local communities
and contributing to broader regional development.

“This project will bring many benefits for people like us,” said Wangmo, a farmer from
Kengkhar Gewog under Mongar Dzongkhag. “During the construction and operation of the dam,
many jobs will be created, and this will help families earn an income without leaving their
villages. When people have work nearby, it reduces the need for our youth to migrate in search
of jobs.”

She said the project is also expected to support small local businesses. “With more workers and
better connectivity, local shops and farmers will have more customers. We will be able to sell
our farm produce more easily and at better prices.”

Wangmo added that road improvements will make a big difference in daily life. “Better roads
mean easier access to markets, schools, and health services. For farmers, it will reduce transport
costs and save time. Overall, this project gives us hope for better livelihoods and a stronger
future for our community.”

Karma Sonam Wangchuk, the Gup of Tsakaling Gewog in Mongar Dzongkhag, said the gewog
is expected to benefit significantly from the project through increased employment and improved
market access for local communities. He said many residents will be able to engage in work and
earn a stable income, while farmers will gain better access to markets for basic agricultural
products.

Improved road connectivity, according to the Gup, will reduce travel time and transportation
costs, making it easier for people to access services and economic opportunities. He added that
better connectivity will help households save on expenses that were previously high due to poor
road conditions and that the overall development is expected to improve livelihoods and
strengthen the local economy.

He further said that Palangphu, located within the gewog, has been identified for planning and
development as a satellite town. Once developed, the satellite town is expected to benefit not
only Tsakaling Gewog but also neighbouring Chali and Tsamang gewogs by creating a new hub
for trade, services, and economic activities in the area.

The Dorjilung Hydroelectric Power Project is expected to make a significant contribution to
Bhutan’s economy. Estimates indicate an increase of 0.6 percent in the country’s gross domestic
product during the construction phase and 2.4 percent once the project becomes fully
operational. The availability of reliable and clean energy from the project is expected to support
the growth of key sectors such as manufacturing, tourism, and small businesses.

Improved energy security is expected to reduce production costs, encourage new investments,
and create employment opportunities across the economy. In addition, increased power
generation will strengthen Bhutan’s export capacity, generating higher revenues from electricity
sales to regional markets. These gains are expected to support overall economic stability, expand
fiscal space, and contribute to long term, sustainable growth driven by renewable energy.