WASHINGTON DC: Bhutan's economy is projected to grow a strong 7.4 percent in FY2025/26 and remain sturdy in the following year, propelled by rising hydropower exports, a tourism rebound, and higher capital spending, the International Monetary Fund (IMF) has said.
Inflation is expected to converge toward 4 percent, anchored by the currency peg and the high import content of investment, according to the IMF Executive Board, which concluded its 2025 Article IV consultation with Bhutan under its lapse-of-time procedure.
The IMF stated that Bhutan's medium-term growth outlook continues to be positive, supported by expanding hydropower generation and continued public investment. At the same time, the IMF mentioned that the risks are tilted to the downside, including delays in hydropower projects, a global slowdown, volatility in crypto-asset holdings, rising fuel prices, and climate-related shocks.
The Fund said tighter fiscal and monetary policies, along with stronger financial sector supervision, are essential to rebuilding buffers and safeguarding macroeconomic stability.
Bhutan's economic recovery gained momentum in 2024 and early 2025. Real GDP growth accelerated sharply toward the end of 2024, reaching 9.1 percent in the fourth quarter, and remained strong in the first half of 2025. Growth was supported by a rebound in industry, resilience in services and the commissioning of major hydropower projects. (IANS)
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