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South Asia Poised for 5.8% Growth in 2024, Outpacing Global Regions

The World Bank | 29/01/2024

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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.

According to the latest South Asia Development Update, Toward Faster, Cleaner Growthgrowth is expected 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.

Growth prospects are subject to downside risks, including due to fragile fiscal positions. 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.

In India, which accounts for the bulk of the region’s economy, growth is expected to remain robust at 6.3 percent in FY23/24. Output in Maldives is expected to grow by 6.5 percent in 2023 and in Nepal is expected to rebound to 3.9 percent in FY23/24, thanks to the strong rebound in tourism in both countries. Several countries in the region are still suffering from the aftermaths of recent currency crises. In Bangladesh, growth will slow to 5.6 percent in FY23/24. In Pakistan, growth is forecast at only 1.7 percent in FY23/24, below the rate of population growth. Sri Lanka is showing signs of recovery after a severe recession and the economy is expected to grow by 1.7 percent in 2024, after contracting by 3.8 percent in 2023.

(The article was first published by The World Bank, South Asia). 

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