Economy Type
Hydropower & Green Economy
Bhutan is classified as a Hydropower & Green Economy country.
This is because hydroelectric power generation utilizing abundant water resources and electricity exports to India are the core of the national economy, and tourism, agriculture, forestry, and digital services are being grown in conjunction with environmental conservation.
The IMF forecasts a growth rate of 7.4% for the 2025/26 fiscal year, citing the expansion of hydropower exports, tourism recovery, and public investment as key growth drivers. The World Bank also assesses the operation of the Punatsangchhu-II power plant and new hydropower projects as key drivers of medium-term growth.
Country Definition
Bhutan is a Himalayan green growth nation expanding tourism, the digital economy, and eco-friendly industries based on hydropower and environmental conservation.
Why It Matters
Although Bhutan has a small economy, it exports hydroelectric power to India and plays an important role in the clean energy supply chain in South Asia.
Bhutan aims for a total power generation capacity of 25 GW by 2040, including 20 GW of hydropower and 5 GW of solar power, and is expanding cooperation with Indian companies in power generation projects.
In addition, the 13th Five-Year Plan presents hydropower, tourism, agriculture, forestry, and water management as key growth sectors and aims to increase the digital economy's contribution to GDP to 10% by 2034.
Korea Perspective
For South Korea, Bhutan holds greater significance as a market for clean energy, smart tourism, agricultural technology, digital government, and climate cooperation than as a large-scale consumer market.
Korean companies can consider cooperation in the following areas.
- Hydroelectric Power Operation and Safety Management
- Solar power and energy storage systems
- Smart Grid
- Mountain-type disaster management
- Smart tourism and reservation platform
- Eco-friendly Hotel & Wellness
- Smart agriculture and food processing
- e-government and digital education
- Medical devices and telemedicine
- Forest and carbon management
Considering the country's size and dependence on India, demonstration projects linked with governments and international organizations are more appropriate than large-scale independent investments.
Key Keywords
- Hydropower & Green Economy
- Hydropower
- Clean Energy
- India Market
- Sustainable Tourism
- Gross National Happiness
- Digital Bhutan
- Organic Agriculture
- Climate Resilience
- Himalayan Economy
Bhutan is a landlocked country located in the Himalayan region between India and China, and operates a constitutional monarchy and a parliamentary system.
Despite its small population and market size, it has improved living standards and poverty indicators based on hydropower, tourism, and the public sector. The World Bank assesses that revenues from hydropower, tourism, and remittances have supported human capital investment and contributed to the achievement of nearly eliminating extreme poverty.
However, youth unemployment, overseas migration, foreign exchange reserves, reliance on hydropower, and high public debt remain ongoing challenges. Despite strong growth, the IMF identifies youth emigration and external imbalances as major structural risks.
Key Features
- hydroelectric power-centered economy
- High economic ties with India
- National Strategy Centered on Environmental Conservation
- High value-added tourism policy
- small domestic market
- Overseas migration of young people
- High public investment and debt
- Fostering the digital economy
Bhutan's economy is centered on hydropower, construction, tourism, agriculture, and public services.
The structure is such that growth rates, exports, and fiscal revenues fluctuate significantly depending on the timing of the construction and operation of hydroelectric power plants, and tourism and the service sector are key areas for diversifying the non-hydroelectric economy. The IMF forecasts that the medium-term growth rate will remain at approximately 6.5%, citing hydroelectric power, public investment, and tourism recovery as major factors.
Although the domestic market is small, demand for energy, ICT, education, medical, agricultural, and tourism infrastructure is formed centered on government procurement and international development projects.
Market characteristics
- Hydropower and public investment focus
- High connectivity with the Indian economy
- small domestic market
- Government and development cooperation projects are important
- Fostering the tourism and digital industries
- Emphasis on environmental regulations and sustainability
MarketHub Point
It is appropriate to approach Bhutan through B2G and project markets centered on clean energy, tourism, digital government, and public infrastructure, rather than the general consumer market.
Hydroelectric power is Bhutan's core industry and largest export industry.
It generates electricity by utilizing abundant water resources and high altitude differences, exporting most of it to India. The operation of new power plants and increased investment by Indian private companies have the potential to significantly increase power generation capacity and exports in the future.
Tourism is a high-value-added industry centered on nature, culture, and wellness, while in agriculture, the production of rice, corn, potatoes, fruits, livestock, and organic farming is important. ICT and digital services are being fostered as new growth sectors for youth employment and industrial diversification.
Key industries
- hydroelectric power
- Tourism and Wellness
- Agriculture and livestock
- food processing
- erection
- forest
- ICT and Digital Services
- public services
- solar power
- Education and medical care
Key resources
- Water resources
- forest
- Clean Power
- Tourism and cultural resources
- Organic production base
- Accessibility to the Indian market
MarketHub Point
Bhutan's core competitiveness lies in its green economy structure, which connects hydropower and the natural environment with energy, tourism, and digital services.
Bhutan's trade relies heavily on India.
Major exports are electricity, mineral and metal products, cement, and agricultural products, while major imports are fuel, machinery, automobiles, food, electrical and electronic products, and construction materials. Both electricity exports and imports of power generation equipment and construction materials account for a significant share.
Bhutan's supply chain can be understood as having the following structure.
India Capital, Technology, Construction Materials
↓
Bhutan Hydropower, Infrastructure
↓
Electricity Production
↓
Exports to India's Electricity Market
Expanding hydropower exports improves foreign exchange and fiscal revenue, but it is also a factor that increases dependence on the Indian market and specific industries. The World Bank forecasts that electricity exports will increase due to the commissioning of new power plants.
major trading partners
- India
- Bangladesh
- china
- thailand
- Singapore
- Nepal
Major exports
- hydroelectric power
- iron and alloy products
- cement
- mineral products
- agricultural products
- Tourism services
Major Imports
- petroleum products
- Machinery and power generation equipment
- automobile
- Steel and construction materials
- food
- Electrical and electronic products
- medicines
Supply chain characteristics
- India-centered trade and logistics
- dependence on power exports
- Import of hydroelectric power construction materials
- Land transportation center
- Seasonal fluctuations in power production
- Small market and high logistics costs
- Sensitive to India's policies and demand
MarketHub Point
Bhutan's supply chain competitiveness lies in its energy connectivity structure, which produces clean electricity and supplies it to the Indian market, rather than its independent manufacturing base.
It is appropriate to approach Bhutan through B2G and project markets centered on hydropower, renewable energy, smart tourism, digital government, and climate resilience, rather than the general consumer market.
The IMF projects a growth rate of 7.4% for the 2025/26 fiscal year, citing hydropower exports, tourism recovery, and capital expenditures as key drivers. The World Bank also assesses that the full operation of the Punatsangchhu-II power plant and new hydropower projects will drive medium-term growth.
For Korean companies, the sectors of hydropower operation and safety management, solar power and ESS, smart grids, mountain disaster response, tourism platforms, agri-food processing, and e-government are relatively suitable. However, since the market size is small and business is centered around government, humanitarian, and development financial institutions, long-term financing and local public partnerships are crucial.
Market characteristics
- Hydropower and public investment focus
- High dependence on the Indian market
- Government and development finance projects are important
- Strict environmental and sustainability standards
- Suitable for small-scale demonstration projects
Key Opportunities
- Hydroelectric Power Operation and Safety
- Solar power and energy storage systems
- Smart Grid
- Mountain Disasters and Climate Response
- Smart Tourism & Wellness
- Agri-food processing
- e-government and digital education
- Medical devices and telemedicine
Major Risks
- small market size
- India's economic and policy dependence
- high public debt
- Hydroelectric power concentration
- Burden of mountain logistics and construction costs
- Youth unemployment and brain drain
Bhutan's future competitiveness depends on how much it diversifies its hydropower-centered economy into tourism, agriculture, digital services, and eco-friendly industries .
The World Bank projects a growth rate of 7.1% for fiscal year 2025/26 and 6.4% for 2026/27, citing the operation of hydroelectric power plants and construction investment as key growth drivers. However, with the youth unemployment rate rising to 20.6% in the fourth quarter of 2025, the gap between growth and job creation remains a key challenge.
The Bhutanese government is promoting hydropower, tourism, agriculture, and digital services and infrastructure as priority sectors through its 13th Five-Year Plan. At the same time, as climate change can affect hydropower, agriculture, and tourism alike, disaster response and economic diversification are crucial.
Changes to Watch Out For in the Future
- New hydroelectric power plant put into operation
- Expansion of electricity exports to India
- Solar Power & ESS Investment
- Recovery of high value-added tourism
- Fostering digital services
- Youth jobs and overseas migration
- Public debt management
- Climate disaster response
Market Position
Clean Energy Project Market + Himalayan Green Economy Hub
A Himalayan-style green energy and public project market growing based on clean power and environmental conservation
Key Opportunities
- hydroelectric power
- Solar Power & ESS
- Smart Grid
- Disaster and Climate Response
- Smart Tourism
- wellness
- Agri-food processing
- Digital Government
- telemedicine
- Forest and carbon management
Recommended Strategy
Observe
Continuously monitor hydroelectric power operation schedules, electricity exports to India, public debt, tourism policies, and climate risks.
↓
Prepare
Establish a cooperation network with the Bhutanese government, Indian partner organizations, and international development banks, and prepare a small-scale demonstration model combining technology, finance, and operations.
↓
Participate
We will prioritize participation in the fields of hydropower safety management, solar power and ESS, smart tourism, digital government, and climate resilience, and gradually expand.
Final Assessment
Bhutan is a Himalayan-style green project market that should be approached with a focus on clean energy, tourism, digital government, and climate resilience solutions, rather than a large-scale commodity market.
Scope of investigation
This material was compiled by cross-referencing economic and industrial data from international organizations, the government of Bhutan, and development finance institutions.
international organizations
- International Monetary Fund
- World Bank
- Asian Development Bank
- United Nations Development Program
- World Trade Organization
Government and public institutions
- Royal Government of Bhutan
- Ministry of Finance
- Gross National Happiness Commission
- Department of Energy
- Department of Tourism
- National Statistics Bureau
- KOTRA
- Korea Export-Import Bank Overseas Economic Research Institute
- Korea Institute for International Economic Policy
Research and industrial data
- IMF Bhutan 2025 Article IV Consultation
- World Bank Bhutan Development Update 2026
- Bhutan 13th Five-Year Plan
- Bhutan Macroeconomic Performance and Outlook Report 2026
- World Bank Bhutan Climate and Development Report
- International Hydropower, Tourism, and Digital Economy Data
Writing Verification
This document was prepared in accordance with the following principles.
- Research on actual international organization, government, and industry data
- Distinction between confirmed facts and prospects
- Application of the perspective on South Korea and MarketHub utilization
- Written based on WCI-001 Golden Template v1.0
- Maintain WCI-001 Part 2 standard quantities
- Check ISO country alphabetical order
Bhutan is a Hydropower & Green Economy country growing based on hydroelectric power generation and environmental conservation .
Future competitiveness depends on stably expanding electricity exports to India while growing the tourism, agriculture, digital services, and renewable energy industries together.
It is desirable for South Korea to approach Bhutan as a public project cooperation market where clean energy, smart tourism, e-government, and climate resilience technologies can be demonstrated, rather than as a general consumer market.
Final evaluation
Bhutan is a Himalayan green economy nation that combines clean power and environmental conservation as a national growth strategy, and from a MarketHub perspective, it is evaluated as a “Clean Energy Project Market + Himalayan Green Economy Hub.”