Bhutan Development Update - Special section: Labor Market and Jobs in Bhutan (English)

Bhutan's economy has recovered from the series of shocks resulting from the COVID-19pandemic and Russia's invasion of Ukraine. After experiencing contractions of 2.5 percent and3.3 percent in FY19/20 and FY20/21, respectively, the economy exhibited signs of recovery insubsequent years. As pandemic-related relief measures were gradually phased out and capitalexpenditures moderated, the fiscal deficit saw a decline in FY22/23. Borders were open for tourists in September 2022, though tourists' arrivals remained below the pre-COVID level. In December 2023, Bhutan achieved the milestone of graduating from the United Nations (UN) least developed country (LDC) status. Yet, the country faces several macroeconomic challenges. Fiscal deficit is widening due to slowdown in revenue and increase in current expenditure. The nationalinvestment in cryptocurrency mining operations resulted in a significant decline of internationalreserves and a widening of the current account deficit (CAD) due to imports of informationtechnology (IT) equipment and related goods for cryptocurrency mining. Going forward, a fiscalconsolidation to keep the fiscal deficit and public debt at a sustainable level and improvement inthe external balances would be important to achieve Bhutan's medium to long term goals.