Bhutan’s economic freedom score is 57.4, making its economy the 115th freest in the 2015 Index. Its score has increased 0.7 point from last year, with improvements in freedom from corruption, the management of government spending, and business freedom partially offset by declines in labor freedom and fiscal freedom. Bhutan is ranked 24th out of 42 countries in the Asia–Pacific region, and its overall score is below the global and regional averages.
Over the past five years, Bhutan has charted a V-shaped trend in economic freedom. Bolstered by improvements in freedom from corruption and business freedom, it has bounced back from its lowest economic freedom score ever in 2013. Nonetheless, Bhutan continues to be in the ranks of the “mostly unfree,” with scores on many of the 10 economic freedoms remaining below the world averages.
Efforts to diversify the economy have been at the top of the policymaking agenda in the past few years. Hydropower production and development, led by the government, has been a large driver of growth, but the poverty rate remains persistently high. Landlocked and mountainous, Bhutan remains relatively isolated from the world economy and has yet to open itself fully to international trade and global financial flows.