Bhutan is graduating from Least Developing Country (LDC) status in 2023. It was granted LDC status in 1971. Bhutan has maintained fair political stability, consistent economic growth, and improved social indicators in the last few decades. However, Bhutan’s graduation comes amid the worst economic blow by the COVID-19 pandemic. The pillars of growth have been shattered but the plan for graduation is unlikely to be extended. Bhutan has not met a few criteria under the Economic Vulnerability Index (EVI) while it has fulfilled other criteria. The graduation is expected to cause no major impact on Bhutan due to its economic reliance (in both grants and trade) on a single country (India). Bhutan has low volume trade with third countries. Yet a sensible amount of grants, funds and market access will be lost that may challenge Bhutan’s continued economic growth and economic prosperity. This article investigates the process, progress, and challenges of the country after it attains the status of a developing nation.
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