The World Bank has said that South Asia is expected to grow by 5.8 percent this year—higher than any other developing country region in the world, but slower than its pre-pandemic pace and not fast enough to meet its development goals.
In its twice-a-year regional outlook "Toward Faster, Cleaner Growth", the World Bank forecasts growth to slow to 5.6 percent in 2024 and 2025, as post-pandemic rebounds fade and a combination of monetary tightening, fiscal consolidation, and reduced global demand weigh on economic activity.
Government debt in South Asian countries averaged 86 percent of GDP in 2022, increasing the risks of defaults, raising borrowing costs, and diverting credit away from the private sector.
The region could also be affected by a further slowdown in China’s economic growth and natural disasters made more frequent and intense by climate change, the report highlighted.
“While South Asia is making steady progress, most countries in the region are not growing fast enough to reach high-income thresholds within a generation,” said Martin Raiser, World Bank Vice President for South Asia.
“Countries need to urgently manage fiscal risks and focus on measures to accelerate growth, including by boosting private sector investment and seizing opportunities created by the global energy transition.”
According to the report, output in Maldives is expected to grow by 6.5 percent in 2023 due to the strong rebound in tourism.
“South Asia’s energy intensity of output is about twice the global average and the region lags in the adoption of more advanced energy-efficient technologies,” said Franziska Ohnsorge, World Bank Chief Economist for South Asia.
“Improvements in energy efficiency, in the context of a rapid global energy transition, are an opportunity for South Asia to make progress toward both environmental and economic goals.”
