The Bhutanese economy is the smallest in the world. 23.2 percent of the people live under poverty line but most of the Bhutanese have shelters and sufficient to eat. Majority of the population are illiterate and live in rural areas. Over the years the living standard of the people has grown substantially. Most of the villages have a school, basic health units, electricity, and connection to farm roads.

Bhutanese practice subsistence farming and animal husbandry. Its economy is based on agriculture, forestry and hydropower. Handicrafts like weaving, wood craft, bamboo and cane craft, and paintings add to the income.

Bhutan has always been self-sufficient in terms of food consumption. The main food crops are maize, rice, buckwheat, barley and wheat. The cultivation of cash crops like apples, oranges, ginger and cardamom has added to the national revenue. Cattle products like milk, butter and cheese have been the major diet besides adding to the income of many farmers.

Bhutan has made a significant expansion in tourism industry after opening its doors to tourists in mid 70s. The development in tourism has led to boom in arts and crafts. The tourist arrival has increased by manifolds and is the second most contributor of the revenue, next to hydropower.