Overview

  • Compared to six months ago, GDP growth in South Asia is revised downward by 1.1 percentage points for this year and by 0.7 and 0.4 percentage points for the next two years.

    With 5.9 percent, growth in 2019 is now forecast to be 0.7 percentage points lower than last year.

    Compared to earlier forecasts, lesser investment and private consumption and more government consumption is expected.

    The expected modest recovery to 6.3 percent in 2020 and 6.7 percent in 2021 is tentative as forecasts under current circumstances, particularly for investment, are highly uncertain.  

    Last Updated: Oct 11, 2019


    GDP (current US$)


    Real GDP growth in South Asia

     

          2018     

    2019 (e)

    2020 (f)  

    2021 (f)  

    Afghanistan (CY)

    1.8

    2.5

    3.0

    3.5

    Bangladesh (FY)

    7.9

    8.1

    7.2

    7.3

    Bhutan (FY)

    4.6

    5.0

    7.4

    5.9

    India (FY)

    6.8

    6.0

    6.9

    7.2

    Maldives (CY)

    6.7

    5.2

    5.5

    5.6

    Nepal (FY)

    6.7

    7.1

    6.4

    6.5

    Pakistan (FY, factor prices)

    5.5

    3.3

    2.4

    3.0

    Sri Lanka (CY)

    3.2

    2.7

    3.3

    3.7

    Source: World Bank. GDP: Gross Domestic Product, CY: Calendar Year, FY: Fiscal Year, e: Estimate f: Forecast; in Bangladesh, Bhutan, Nepal, and Pakistan, 2019 refers to FY2018/19 and ended in June 2019. For India, 2019 refers to FY2019/20 and will end in March 2020.

    • In Afghanistan, with improved farming conditions and assuming political stability after the elections, growth is expected to recover and reach 3 percent in 2020 and 3.5 percent in 2021. However, the outlook is highly vulnerable and may be affected by deteriorating confidence due to uncertainty around international security assistance, election-related violence, and peace negotiations with the Taliban.  
    • In Bangladesh, GDP is projected to moderate to 7.2 percent this fiscal year and 7.3 percent the following one. The outlook is clouded by rising financial sector vulnerability, but the economy is likely to maintain growth above 7 percent, supported by a robust macroeconomic framework, political stability, and strong public investments.
    • In Bhutan, GDP growth is expected to jump to 7.4 percent this fiscal year with the commissioning of Mangdechhu, a new hydropower plant, and the completion of the maintenance of Tala, another one. Growth in fiscal year 2021 is forecast just below 6 percent on the base of strong tourism growth and increased revenue from the existing power plants.
    • In India, after the broad-based deceleration in the first quarters of this fiscal year, growth is projected to fall to 6.0 this fiscal year. Growth is then expected to gradually recover to 6.9 percent in fiscal year 2020/21 and to 7.2 percent in the following year. 
    • In Maldives, growth is expected to reach 5.2 percent in 2019, due to a slowdown in construction following the completion of the international airport and a connecting bridge. However, with support from new infrastructure investment and the expansion of tourism, growth is expected to pick up again to an average of 5.6 percent over the forecast horizon.
    • In Nepal, GDP growth is projected to average 6.5 percent over this and next fiscal year, backed by strong services and construction activity due to rising tourist arrivals and higher public spending.
    • In Pakistan, growth is projected to deteriorate further to 2.4 percent this fiscal year, as monetary policy remains tight, and the planned fiscal consolidation will compress domestic demand. The program signed with the IMF is expected to help growth recover from fiscal year 2021-22 onwards.
    • In Sri Lanka, growth is expected to soften to 2.7 percent in 2019. However, supported by recovering investment and exports, as the security challenges and political uncertainty of last year dissipate, it is projected to reach 3.3 percent in 2020 and 3.7 percent in 2021.

    World Bank Assistance

    The Bank’s strategy in South Asia emphasizes The Bank’s strategy in South Asia emphasizes promoting sustainable and inclusive growth, investing in people, and strengthening resilience. It focuses on supporting policy reforms for private sector–led job creation; addressing stunting with multisectoral solutions; increasing female labor force participation; supporting refugees, returnees, and internally displaced persons; and addressing climate risks, including through disaster preparedness and management.

    In fiscal year 2019, the World Bank approved $8.9 billion in lending to the region for 54 operations in fiscal 2019, including $4.0 billion in IBRD loans and $4.9 billion in IDA commitments.

    The Bank also delivered 178 advisory services and analytical products to eight countries, totaling $79 million, providing technical advice on issues such as energy sector reform, female labor force participation, and climate change.

     

    Last Updated: Oct 11, 2019


    GNI per capita, Atlas method (current US$)

  • South Asia's robust growth has translated into declining poverty and impressive improvements in health and education.

    However, as of 2013, the proportion of people living on less than $1.90 a day was estimated at 14.7 percent, or about 249 million people—a third of the global poor.

    Moreover, many countries in the region suffer from extreme forms of social exclusion and significant infrastructure gaps.

    The high growth has also not translated into creating jobs at the pace needed to accommodate around 1.5 million people entering the labor force every month.

    The rate of women's participation in labor markets is very low at 28 percent and is even declining in some countries.

    Supporting sustainable growth and creating jobs

    The region can sustain high growth only if both investments and exports grow stronger.

    With an estimated 1.5 million people entering the job market every month over the next two decades, job creation is essential.

    To address these challenges, the Bank has been supporting efforts such as the $250 million Jobs Programmatic Development Policy Project in Bangladesh to address jobs challenges and strengthen systems that protect workers and build resilience.

    In Afghanistan, the $100 million Women’s Economic Empowerment Rural Development Project aims to increase the social and economic empowerment of poor rural women.

    The Bank Group is also helping countries maximize their development resources by drawing on sustainable private sector solutions.

    In Nepal, a $100 million project—the first in a series of two—is supporting the financial viability and governance of the electricity sector, while the IDA18 IFC-MIGA Private Sector Window will provide $103 million in financing and guarantees for the Upper Trishuli-1 Hydropower Plant, lowering risk and encouraging the private sector to invest.

    In India, the $400 million Innovation in Solar Power and Hybrid Technologies Project supports renewable energy and battery energy storage solutions.

    Investing in people and supporting inclusive growth

    To strengthen 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.

    Alongside development partners, we organized human capital summits in Bhutan, Nepal, and Pakistan.

    The new Pakistan@100: Shaping the Future report emphasized the country’s urgent need to invest more and better in its people, if they are to be richer, better educated, and healthier by 2047.

    Meanwhile, initiatives such as the $400 million Program toward Elimination of Tuberculosis in India build on earlier efforts to improve the quality and accessibility of health and nutrition services.

    Fostering resilience to conflict and climate change

    Conflict and fragility risks are increasing in South Asia, resulting in greater displacement and growing border tensions.

    We are working with partners to provide basic services to the displaced and hosting communities, such as the $200 million grant for the Afghanistan Eshteghal Zaiee–Karmondena Project, which aims to strengthen jobs and economic opportunities in cities with a high influx of displaced people.

    South Asia is also highly vulnerable to the impacts of climate change, including climate-induced natural disasters and rising sea levels.

    The South Asia’s Hotspots: Impacts of Temperature and Precipitation Changes on Living Standards report suggests that 800 million people in the region live in areas where livelihoods are vulnerable to climate change impacts.

    Progress depends on reducing carbon emissions, changing the energy mix, mitigating the effects of climate change, and building resilience.

    For example, the $125 million Climate-Smart Irrigated Agriculture Project in Sri Lanka will improve agricultural productivity and diversification through the adoption of climate-smart practices and better water management.

    The $246 million Andhra Pradesh Integrated Irrigation and Agriculture Transformation Project in India aims to enhance productivity, profitability, and climate resilience for smallholder farmers.

    The $175 million Bangladesh Sustainable Forests and Livelihoods Project will improve forest management and increase benefits for forest-dependent communities, with emphasis on women and adolescent girls.

    Promoting regional integration

    South Asia remains one of the least economically integrated regions in the world.

    Hence we support cross-border trade, transport and energy connectivity, and longterm water security and environmental sustainability in the region.

    The $460 million Khyber Pass Economic Corridor Project aims to expand economic activity between Pakistan and Afghanistan by improving regional connectivity and promoting private sector development along this key corridor.

    The Exports to Jobs: Boosting the Gains from Trade in South Asia report analyzes how labor market policies can help various groups of workers acquire the right skills and ensure that the gains of increased exports are shared more broadly across societies.

    Our report, A Glass Half Full: The Promise of Regional Trade in South Asia, unpacks critical barriers to trade integration and offers precise, actionable policy recommendations that could help achieve measurable progress in key areas of trade and integration, benefiting all countries in the region.

    Last Updated: Oct 11, 2019

  • 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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