Global energy transition creates opportunities for faster, cleaner growth in South Asia

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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. Franziska Ohnsorge, World Bank Chief Economist for South Asia, talks about the region's economic outlook and how the global energy transition can create opportunities for faster, cleaner growth.

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00:00 At almost 6%,

00:01 growth in South Asia is expected to be faster

00:04 than in any other emerging market and developing economy region

00:07 over the next couple of years.

00:09 However,

00:09 that still represents a slowdown from the pre-pandemic average,

00:13 and there are a number of risks that could derail this outlook,

00:16 especially fiscal risks.

00:17 The average South Asian economy has government debt

00:21 amounting to about 86% of GDP,

00:23 more than in any other emerging market and developing economy region.

00:27 In some countries,

00:28 outright debt default has already.

00:30 Growth

00:30 and in some other countries,

00:32 a heavy reliance by governments on domestic borrowing

00:35 has raised borrowing costs and has diverted credit away

00:39 from the private sector.

00:40 So in the short term,

00:41 an urgent policy priority is to manage and reduce fiscal risks.

00:45 In the longer term,

00:46 a policy priority is to create growth and jobs

00:49 in a sustainable manner.

00:50 South Asia uses twice as much energy

00:53 as the global average to produce each unit of output,

00:56 and its firms lag behind

00:58 in the adoption of.

00:59 More advanced energy efficient technologies.

01:02 The energy transition is an excellent opportunity

01:04 for the region to lift productivity,

01:07 create jobs,

01:08 reduce reliance on energy imports,

01:10 and cut pollution.

01:12 However,

01:12 it will have implications for labor markets since about 9% of workers

01:16 are currently employed in pollution intensive jobs.

01:19 It will be up to governments to make sure the energy

01:21 transition is used as an opportunity to create jobs and growth

01:25 while at the same time protecting the most vulnerable workers.

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At almost 6%, growth in South Asia is expected to be faster than in any other emerging market and developing economy region over the next couple of years. However, that still represents a slowdown from the pre-pandemic average, and there are a number of risks that could derail this outlook, especially fiscal risks. The average South Asian economy has government debt amounting to about 86% of GDP, more than in any other emerging market and developing economy region. In some countries, outright debt default has already. Growth and in some other countries, a heavy reliance by governments on domestic borrowing has raised borrowing costs and has diverted credit away from the private sector. So in the short term, an urgent policy priority is to manage and reduce fiscal risks. In the longer term, a policy priority is to create growth and jobs in a sustainable manner. South Asia uses twice as much energy as the global average to produce each unit of output, and its firms lag behind in the adoption of. More advanced energy efficient technologies. The energy transition is an excellent opportunity for the region to lift productivity, create jobs, reduce reliance on energy imports, and cut pollution. However, it will have implications for labor markets since about 9% of workers are currently employed in pollution intensive jobs. It will be up to governments to make sure the energy transition is used as an opportunity to create jobs and growth while at the same time protecting the most vulnerable workers.

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