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Overview

  • South Asia’s economic outlook is grim The region is set to plunge in 2020 into its worst-ever recession as the devastating impacts of COVID-19 on South Asian economies linger on, taking a disproportionate toll on informal workers and pushing millions of South Asians into extreme poverty.

    According to the latest South Asia Economic Focus Beaten or Broken? regional growth is expected to contract by 7.7 percent in 2020, after topping 6 percent annually in the past five years. India’s economy, the region’s largest, is expected to contract by 9.6 percent in the fiscal year that started in March 2020. Regional growth is projected to rebound to 4.5 percent in 2021. Factoring in population growth, however, income-per-capita in the region will remain 6 percent below 2019 estimates, indicating that the expected rebound will not offset the lasting economic damage caused by the pandemic.

    In previous recessions, falling investment and exports led the downturn. This time is different, as private consumption, traditionally the backbone of demand in South Asia and a core indicator of economic welfare, will decline by more than 10 percent, further spiking poverty rates. 

    Last Updated: Oct 08, 2020


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    Last Updated: Dec 14, 2020


    GNI per capita, Atlas method (current US$)

  • COVID-19 response

    Since early April, the World Bank has delivered 25 operations totaling almost $7.9 billion to support COVID-19 recovery in South Asia. The initial focus has been on the health emergency response and protecting the most vulnerable. Going forward, our priority is to pave the way for an inclusive and resilient recovery. Countries need to reimagine the delivery of essential services, such as health, education and social protection to protect their people better against future shocks. To create a more resilient future, countries need to sustain businesses and support job creation.

    Supporting sustainable growth and creating jobs

    As it paves the way for recovery, South Asia can sustain high growth only if investments and exports both grow stronger. With an estimated 1.5 million people entering the job market every month over the next two decades, job creation is essential.

    A $120 million project in Nepal will improve employment services and labor market outcomes for nearly 100,000 youth, especially women.

    In Pakistan, an additional $700 million for the Dasu Hydropower Project will help lower the overall cost of the country’s energy generation, benefiting millions of users and making electricity more affordable. The hydropower plant will provide most of its electricity during the summer months, when demand is highest, helping reduce blackouts.

    In Afghanistan, a $99 million financing package is supporting two gas-to-power energy projects to increase the amount of electricity generated domestically while leveraging private financing for the energy sector. This package includes IDA guarantees and financing from the IDA18 Private Sector Window and leverages IFC loans and MIGA guarantees.

    In India, a $210 million project in the state of Maharashtra will help smallholder farmers access emerging domestic and export markets, increase private sector investment in agricultural value chains, increase productivity, respond to price fluctuations, and build crop resilience. It will be implemented in all 36 state districts and benefit over 1 million farming households. At least 43 percent of participating farmers and workers are expected to be women.

    Investing in people and supporting inclusive growth

    To boost human capital as a driver of growth, the Bank is helping the region improve access to and quality of education, address childhood stunting and malnutrition, strengthen health systems and services, and expand safety nets to protect the poorest people.

    In Pakistan, we committed $436 million to improve health and education services and social protection for poor and vulnerable households in Balochistan, Khyber Pakhtunkhwa, and Punjab. These projects will increase the quality and uptake of health services, improve early childhood education, provide learning opportunities for children in primary and secondary school, and establish more efficient economic and social inclusion programs. In December 2019, we also convened the 100-day “Girls Learn, Women Earn” campaign, which focused on creating better learning and employment opportunities for Pakistani girls and women.

    In Bangladesh, the $100 million Municipal Water Supply and Sanitation Project will help provide access to cleaner water sources and sanitation services for at least 600,000 people. It will also support hand-washing stations in several municipalities to improve hygiene, both as part of the effort to address COVID-19 and for the longer term.

    Fostering resilience to conflict and climate change

    Conflict and fragility risks are increasing in South Asia, resulting in greater displacement. We are working with partners to provide basic services to the displaced and hosting communities. In Bangladesh, we approved three operations totaling $350 million to help address the needs of host communities and displaced Rohingya. Through three projects, we will provide nearly 4 million people with access to health, nutrition, and family planning services and address gender-based violence through preventive and response services.

    The region is also highly vulnerable to climate impacts, including natural disasters and rising sea levels and temperatures. Addressing this requires building resilience at the local level.

    In India, an $80 million project will improve water management and increase agricultural productivity for more than 400,000 smallholder farmers, women, and pastoral communities in Himachal Pradesh.

    For the first time in South Asia, we extended a $10 million Catastrophe Deferred Drawdown Option (CAT-DDO), which will help Maldives mitigate the risks and vulnerabilities associated with COVID-19.

    In Bhutan, $15 million in financing with a CAT-DDO will support reforms to manage climate and disaster risks, including disease outbreaks. In Nepal, we provided an additional $200 million to the Earthquake Housing Reconstruction Project. This will fund nearly 87,000 more houses in 32 districts affected by the 2015 earthquakes and provide grants for families to ensure rebuilt housing is earthquake resistant.

    In India, a $400 million project will help the government develop an institutional framework to manage the Ganga river basin and finance investments that address pollution in the basin’s urban areas.

    Promoting regional integration

    The Bank supports cross-border trade, transport and energy connectivity, long-term water security, environmental sustainability, and resilience in South Asia, which remains one of the world’s least economically integrated regions.

    In Bangladesh, a $500 million program will expand and enhance a 260-kilometer national highway to support greater regional trade and help improve the livelihoods of over 20 million people in rural areas. A $50 million regional project will support a partnership to fight plastic pollution in transboundary river systems and the region’s shared seas.

    Our report Unleashing E-Commerce for South Asian Integration analyzed how e-commerce can become a driver of growth and boost trade. By increasing the use of e-commerce, the region could help increase competition and firms’ productivity, increase market access, and strengthen commercial linkages between countries.

    Last Updated: Dec 20, 2020

  • World Bank support has helped South Asia achieve the following results, among others:

    • Afghanistan: Bringing most of the efforts in public health service delivery under one umbrella in Afghanistan, the Sehatmandi (Health) Project aims to increase the utilization and quality of health, nutrition, and family planning services across Afghanistan. The project supports implementation of a Basic Package of Health Services and an Essential Package of Hospital Services through contracting arrangements across the country. Sehatmandi also supports efforts to strengthen the capacity of the Ministry of Public Health at central and provincial levels to effectively carry out its stewardship functions.
    • Bangladesh: Bangladesh has made remarkable gains in ensuring access to basic and secondary education in the past two decades. In 2015, the country’s net enrollment rate at the primary school level reached above 90 percent, and that at secondary school level, around 62 percent. With nearly 6.4 million girls in secondary schools in 2015, Bangladesh is among the few countries to achieve gender parity in school enrollment and has more girls than boys in secondary schools.
    • India: Since 2000, World Bank projects have contributed over $3.4 billion in financing for rural water supply and sanitation.  This has helped about 36 million people in 40,000 villages—with populations ranging from 150 to 15,000—gain better access to drinking water. 
    • Nepal: 85 percent of the rural population has access to clean water and 81 percent has access to sanitation.
    • Pakistan: The Punjab Skills Development Program supported by World Bank aims to support employability of youth of Punjab. It has developed more than 30 competency-based learning assessments in priority sectors, with at least 80 public and private institutes offering these courses, and having trained 16,000 graduates.
    • Sri Lanka: Climate-related hazards pose a significant threat to economic and social development in Sri Lanka. The ongoing Climate Resilience Improvement Project (CRIP) carried out rehabilitation works related to irrigation hydraulic infrastructures benefiting 50,000 hectares of agricultural land, landslide mitigation works in 18 schools protecting 30,000 students while establishing transport connectivity for 750,000 people by rehabilitating roads damaged by landslides and floods.

     

    SPOTLIGHT: MAKING NEPAL AN ATTRACTIVE DESTINATION FOR INVESTMENT

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    Four years ago, Nepal was reeling from a devastating earthquake that claimed thousands of lives. Today, its future looks considerably brighter.

    Extreme poverty is steadily falling, and growth has remained relatively strong for the last two years. For the first time in decades, Nepal also has a stable, majority government to carry out a long-term development vision.

    New laws aim to encourage foreign direct investment, improve the business climate, and protect intellectual property.

    This combination of factors helped attract more than 700 foreign investors from over 300 companies representing 40 countries at the Nepal Investment Summit, organized by the government in March 2019. When the summit concluded, some 15 deals had been signed to develop hydro and solar power, 5G network services, a high-end resort, grain storage warehouses, and public-private partnerships.

    Investors’ applications were also received for 11 other projects in response to the 77 that were showcased by the government.

    The Bank Group hosted a pre-summit roadshow in Malaysia and Singapore to help raise interest among investors in those countries. The Bank Group’s financial and technical support for the summit reaffirms the 50-plus year engagement with Nepal and supports our commitment to the country’s ambitious goal of becoming a middle-income country by 2030.

    Last Updated: Oct 11, 2019

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