South Asia economy to slow - World Bank | Daily News

South Asia economy to slow - World Bank

The World Bank states that the economies of the South Asia region (SAR) continue to be adversely affected by shocks emanating from the Russian Federation’s invasion of Ukraine, including higher food and energy prices, and by the tightening of global financial conditions as central banks in the region and elsewhere act to fight high inflation.

Several economies, however, maintained resilient growth despite the global economic backdrop.

In India, which accounts for three-fourths of the region’s output, growth expanded by 9.7 percent on an annual basis in the first half of fiscal year 2022/23 (April-March), reflecting strong private consumption and fixed investment growth.

In Sri Lanka, output is estimated to have fallen by 9.2 percent in 2022 as the government ran out of the foreign exchange needed to cover food and fuel imports, and to service external debt.

In Maldives, tourism rebounded robustly in 2022, returning its GDP to its pre-pandemic levels more quickly than previously expected; growth for the year is expected to be 12.4%.

Other economies faced difficult domestic developments and global spillovers. Bangladesh was priced out of global energy markets and unable to meet the energy needs of households and businesses leading to blackouts and factory closures.

In Afghanistan, the sudden pause of international aid in August 2021—the foundation of economic activity for much of the preceding two decades—is estimated to have an accumulated contraction of output between 2021 and 2022 of about one-third, leading to a large increase in poverty.

The report adds that the growth in South Asian Region (SAR) is projected to slow to 5.5% in 2023, from 6.1 percent the previous year, on slowing external demand and tightening financial conditions, before picking up slightly to 5.8% in 2024.

Growth is revised lower over the forecast horizon and is below the region’s 2000-19 average growth of 6.5%. This pace reflects still robust growth in India, Maldives, and Nepal, offsetting the effects of the floods in Pakistan and the economic and political crises in Afghanistan and Sri Lanka.

Risks to the regional growth outlook remain to the downside. Food insecurity is rising in the region which consumes about one-fifth of its calories from wheat products, houses more than one-third of the global poor, and where food accounts for a greater share of its consumption basket compared to other emerging and developing economies.

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