Bhutan faces economic crisis, turns to 'Gross National Happiness 2.0' as solution.

The world has praised Bhutan's approach to governance, which emphasizes "Gross National Happiness" and harmonizes economic growth with the happiness of its people.

The newly elected Prime Minister of Bhutan, Tshering Tobgay, has hinted at changes to the country's "Gross National Happiness 2.0" initiative as Bhutan faces an economic crisis that threatens its stability.

Since its introduction by former king Jigme Singye Wangchuck in the early 1970s, GNH has served as the guiding principle of Bhutan.

With youth unemployment rates of nearly 30% and about one in eight people living in poverty, is Bhutan's pursuit of national happiness sustainable?

"Tobgay stated in a CNBC interview on May 10 that the answer is "yes and no." The reason for this response is to emphasize the need for economic growth."

But the tenets of GNH will not be abandoned, he added.

"Should we abandon caution? No. We can develop and develop in a balanced way."

Finding a new equilibrium

Bhutan will maintain a balanced approach to economic development, prioritizing social progress, environmental protection, cultural preservation, and good governance, as stated by the leader.

"Nobody could have imagined that we would succeed in these areas," he said.

He suggested that the principle used in the past may have been too one-sided.

""We have been very cautious and conservative, which has caused us to lag economically," he said."

Bhutan has been similarly guarded in its approach to tourism, as Tobgay mentioned.

"Tobgay stated to CNBC that we have been extremely cautious in our approach to tourism, adopting a very conservative and cautious stance."

Bhutan made a mistake, but it was in the name of sustainability and conservation, he stated.

"We are paying for caution right now."

Doubling down on sustainable tourism

Unlike other Asian countries, Bhutan's tourism industry is taking longer to recover from the pandemic. In 2023, international arrivals in the country were only one-third of the 2019 levels.

Since its reopening in September 2022, the country has made three changes to its "Sustainable Development Fee," first raising it to $200 per adult per day and then lowering it twice.

"Tourism is starting to recover, but not to its pre-pandemic levels," said Tobgay, which caused a lot of confusion.

Bhutan is sticking to its "high value, low volume" approach to tourism, even though mass tourism can bring significant economic benefits, Tobgay said in an interview with CNBC.

Tobgay stated that many tourists are willing to pay $200 per day as a sustainable development fee, which is currently $100 per adult per day.

He stated that Bhutan remains committed to both increasing tourism and managing visitor numbers.

The tourism industry in our country is a promising way to create the jobs that our young people desire, as stated by him.

According to Reuters, thousands of young Bhutanese workers have left the country in search of employment opportunities abroad. In the 11 months preceding May 2023, some 1.5% of Bhutan's population moved to Australia alone for jobs and skills training, the report said.

""We hope that this temporary development will allow us to strengthen our economy through tourism and other interventions, so that our children who have gained valuable experience while working outside can return home," said Tobgay."