South Asia is the World’s Fastest-growing Region

According to the World Bank, South Asia will grow by 5.8 percent this year, making it the fastest-growing region in the world even though the rate is still lower than it was before the pandemic.

The World Bank’s most recent South Asia Development Update predicted that as post-pandemic recoveries fade and decreased global demand weighs on economic activity, growth in the region will slightly slow to 5.6 percent in 2024 and 2025.

According to Franziska Ohnsorge, the organization’s chief economist for South Asia, the region is growing at a rate of nearly 6 percent this year, outpacing all other emerging markets.

In this area, labor is inexpensive. Around $2,000 per person, or one-fifth of what is earned in East Asia and the Pacific, is the per capita income in South Asia.

The countries that make up South Asia are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.

The majority of the region’s economy, which is centered on India, is predicted to continue to grow at a 6.3 percent rate in the fiscal year 2023–2024. Maldives and Nepal are also anticipated to grow as a result of a pickup in tourism.

According to the World Bank, Pakistan’s projected growth of only 1.7 percent is below the country’s rate of population growth, while Bangladesh’s growth may slow to 5.6 percent. The IMF last week decided not to release a second tranche of a funding package to Sri Lanka because it felt that the country had not made enough progress with economic reforms. Sri Lanka’s economy collapsed last year and is only now beginning to recover from a severe recession.

Another issue, according to the World Bank, is that South Asian governments’ average debt levels in 2022 will be higher than those in other emerging markets, at 86 percent of GDP. It further stated that a high debt load might raise borrowing costs and raise the risk of default.

The report noted that the region’s economic outlook could be impacted by China’s economic slowdown and that it is susceptible to additional shocks from natural disasters, which are more frequent and severe as a result of climate change.

Ohnsorge asserted that governments in South Asia could improve fiscal conditions by seizing opportunities for energy transition, which could increase employment, decrease reliance on energy imports, and lower pollution levels.