Bhutan possesses one of the world's smallest but fastest-growing economies, heavily reliant on a single dominant sector: hydropower. The country harnesses its fast-flowing rivers to generate electricity, the vast majority of which is exported to neighboring India. This energy trade forms the backbone of Bhutan's revenue.
The economy is guided by the philosophy of Gross National Happiness, which dictates that economic growth must not come at the expense of environmental degradation or cultural erosion. Because of this, Bhutan pursues a "High Value, Low Volume" tourism policy. International tourists must pay a daily Sustainable Development Fee (SDF), which funds free healthcare, free education, and conservation efforts.
While GDP has grown significantly over the last two decades, challenges remain. The economy lacks diversification, youth unemployment in urban areas is a pressing issue, and a large portion of the population remains engaged in subsistence farming. The local currency, the Ngultrum, is pegged at par to the Indian Rupee.