The country is expected to make further gains in reducing poverty over the next two years, although emerging risks could slow that progress, according to latest projections. According to the World Bank’s Bhutan Development Update 2026, extreme poverty, meaning people living on less than three US dollars a day or around Nu 277 has almost been eliminated in the country. The overall poverty rate is projected to fall to 4.5 percent next year.
More than 40,000 Bhutanese are likely to remain in poverty or on less than 8.3 US dollars a day this year, down from around 98 thousand in 2022.
This number is expected to drop to around 35 thousand next year.
According to the World Bank, robust economic growth and remittances have contributed to poverty reduction. Investments in basic services such as healthcare and education have also contributed to the achievement.
The report states that poverty levels vary widely across the country.
For example, poverty is very low in Thimphu but much higher in districts like Zhemgang. Most of the poor, about 87 per cent live in rural areas in Bhutan.
Despite this variation, inequality in spending remains relatively low compared to other South Asian countries, but income inequality is still high. This means that while people may spend similarly, their actual earnings differ more widely.
Many people still depend on agriculture, which is vulnerable to climate change. Nearly half of the workforce works in this sector, including many women and rural workers.
Jobs are another concern. While overall unemployment remains low, youth unemployment is high at over 20 per cent.
In order to eradicate poverty, Bhutan has to implement structural, economic, and social changes that permanently eliminate absolute poverty, ensuring all citizens have reliable access to basic needs such as food, clean water, housing, education, and healthcare.
The report highlights that recent changes to the Goods and Services Tax could help households by slightly reducing the tax burden, but risks still remain.
The report warns that global economic problems and climate-related disasters could slow down progress. At the same time, limited job opportunities in the private sector could also make it harder for people to earn more and move out of poverty.
Samten Dolkar
