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Growth in South Asia is expected to be strong at 6.0% in 2024, driven mainly by robust growth in India and recoveries in Pakistan and Sri Lanka. But persistent structural challenges threaten to undermine sustained growth, hindering the region’s ability to create jobs and respond to climate shocks.

According to Jobs for Resiliencethe latest South Asia Development Update, South Asia is expected to remain the fastest-growing region in the world for the next two years, with growth projected to be 6.1% in 2025.

But this strong outlook is deceptive. For most countries, growth is still below pre-pandemic levels and is reliant on public spending. At the same time, private investment growth has slowed sharply in all South Asian countries and the region is not creating enough jobs to keep pace with its rapidly increasing working-age population.

In Bangladesh, output is expected to rise by 5.7% in FY24/25, with high inflation and restrictions on trade and foreign exchange constraining economic activity. Bhutan’s economy is expected to grow by 5.7% in FY24/25, supported by higher electricity production alongside growth in mining, manufacturing, and tourism. In India, which accounts for the bulk of the region’s economy, output growth is expected to reach 7.5% in FY23/24 before returning to 6.6% over the medium term, with activity in services and industry expected to remain robust. Output growth in Maldives is expected to be 4.7% in 2024, a half-percentage point downgrade from previous forecasts as tourists shift from high-end resorts toward lower-cost guesthouses. In Nepal, output is expected to grow by 4.6% in FY24/25 as hydropower exports are expected to pick up but recovery outside the hydropower sector is expected to remain slow. Following the contraction in FY22/23, Pakistan’s economy is expected to grow by 2.3% in FY24/25 as business confidence improves. In Sri Lanka, output growth is expected to strengthen to 2.5% in 2025, with modest recoveries in reserves, remittances, and tourism.

Last Updated: Apr 02, 2024