The Bhutanese Leading the way.
Finance Minister Lyonpo Lekey Dorji said rising geopolitical tensions pose a risk to the country’s economic outlook. He noted that Bhutan’s heavy reliance on imported fuel makes it vulnerable to global price swings, which could drive up inflation, increase transport costs, and put pressure on government finances and the broader economy.
Bhutan’s real GDP growth was recorded at 7.5 percent in 2024 and is estimated to reach 8.71 percent in 2025. On average, the economy has grown by about 8.1 percent over the past two years.
Any rise in global oil prices directly affects transportation, food distribution, and construction costs. This, in turn, can drive up consumer prices and increase the cost of living.
Higher fuel prices also have implications for the national budget, especially if the government is required to step in with subsidies or absorb part of the cost increases.
Economists say such pressures could widen the fiscal deficit and increase public debt if sustained over time.
The risks are not limited to fuel alone. Geopolitical instability could also affect tourism flows and supply chains, both of which are critical to Bhutan’s economic recovery.
According to the second quarter update of the Macroeconomic Situation Outlook, growth is projected to average around 6.8 percent. This expansion is expected to be driven primarily by the industry sector, supported by the rollout of major hydropower projects, alongside a gradual recovery in tourism and related services.
Against this backdrop, while the government’s target of doubling GDP by 2029 remains broadly on track, officials say continued vigilance and timely policy responses will be essential.
