Thimphu, May 29, 2025: Bhutan has made strong progress in reducing poverty from 28 percent in 2017 to 11.6 percent in 2022 and nearly eradicating extreme poverty. This success is largely attributed to robust economic growth, increased agricultural productivity, labor market shifts, COVID-19 relief programs, and remittances, says a new World Bank report launched today.
The Bhutan Poverty and Equity Assessment, which has been prepared in collaboration with the National Statistics Bureau of Bhutan, shows that poverty remains predominantly rural, with 87% of the poor people living in rural areas. Between 2017-2022, consumption-based inequality declined significantly. However, a high level of income equality persists. Also, poverty reduced unevenly across the country. In recent years, the pace of job creation has slowed while skilled population are migrating out of the country. To sustain the gains from the poverty reduction, creating quality jobs remains a top priority for the country.
"Bhutan has made remarkable progress over the past decades in significantly reducing poverty and nearly eliminating extreme poverty. The living standards of the people broadly improved, with better education, health and access to basic services," said Adama Coulibaly, World Bank Resident Representative for Bhutan. "Yet, the country is eager to sustain its poverty reduction gains and strengthen resilience as well as the future competitiveness of its economy."
Bhutan's poverty reduction outlook is positive in the short term, but to sustain and build on the poverty reduction gains in the long run, addressing ongoing challenges will be critical. While rural areas have driven poverty reduction, the country must also prepare for future urban challenges.
"The country faces pressing challenges, including its vulnerability to climate shocks, economic shocks, and dependence on remittances, which if not addressed will threaten to undermine Bhutan's dramatic progress. Furthermore, disparities in service quality and slow job growth, particularly in high-productivity sectors, pose challenges to sustain poverty reduction," said Alvin Etang Ndip, World Bank Senior Economist and Author of the report. "Addressing these issues requires boosting productivity, creating more and better job opportunities, particularly for youth and women, and strengthening climate resilience. The country's future prosperity hinges on targeted policies that promote equitable growth and build resilience."
