Overview

  • South Asia holds on to its top spot as the world’s fastest growing region, with growth set to step up to 7.0 percent in 2019, then 7.1 percent in 2020 and 2021, but the region needs to increase its exports to sustain its high growth and reach its full economic potential.

    GDP growth is forecast to slightly accelerate in Afghanistan, India, and Sri Lanka, but to moderate in Bangladesh, Bhutan, Maldives, Nepal, and Pakistan.

    The growth outlook for South Asia assumes that the recent acceleration of export growth continues and that import growth slows so that imports and exports grow at similar rates going forward.

    The further acceleration of export growth will be challenging given global trade weakening. Other downside risks to the forecasts include a re-escalation of political turbulence, fiscal slippages, and deteriorated balance sheets of both banks and corporates. For high GDP growth to be sustained in the long run, the large infrastructure gaps have to be narrowed, and the still weak

     

    Last Updated: Apr 05, 2019


    GDP (current US$)


    Real GDP growth in South Asia

     

          2018     

    2019 (e)

    2020 (f)  

    2021 (f)  

    Afghanistan (CY)

    1.0

    2.5

    3.2

    3.5

    Bangladesh (FY)

    7.9

    7.3

    7.4

    7.3

    Bhutan (FY)

    5.7

    5.4

    5.4

    5.2

    India (FY)

    7.2

    7.5

    7.5

    7.5

    Maldives (CY)

    7.9

    5.7

    5.2

    5.3

    Nepal (FY)

    6.3

    6.0

    6.1

    6.2

    Pakistan (FY, factor prices)

    5.8

    3.4

    2.7

    4.0

    Sri Lanka (CY)

    3.2

    3.5

    3.6

    3.7

    CY: Calendar Year, FY: Fiscal Year, e: Estimate, f: Forecast.

    • In Afghanistan, GDP is estimated to recover and converge to 3 percent over the forecast horizon, with the assumption that drought conditions will ease and political stability will be restored upon presidential elections in September. An improved security situation would support confidence and economic activity.
    • Bangladesh: GDP is forecast to average 7.3 percent in 2019. Activity will be underpinned by strong infrastructure spending and robust investment with expanding credit growth. However, a slowdown in economic activity of trading partners could restrain the contribution of net exports to growth next year.
    • Bhutan: GDP growth is expected to remain solid at 5.4 percent in FY2019-20 and to remain above 5 percent over the forecast horizon, supported by tourism and retail trade.
    • India: GDP is forecast to expand 7.5 percent in FY2019/20. Credit growth will benefit from relatively more accommodative monetary policy amid benign inflationary conditions. Support from delayed fiscal consolidation will partially offset the effects of political uncertainty on economic activity around elections in May. 
    • In Maldives, economic activity is forecast to expand by 5.7 percent in 2019 and to moderate to 5.3 percent over the medium term, as investment projects converge to historical averages.
    • In Nepal, GDP growth is projected to average 6 percent over the medium term. The services sector is forecast to benefit from strong tourism and manufacturing will be supported by the opening of Nepal’s largest cement factory next year.
    • In Pakistan, GDP growth is expected to slow further to 2.7 percent in FY2019/20, as domestic demand remains depressed. Macroeconomic imbalances, reflected in large fiscal and current account deficits, are expected to resolve gradually. Remittances flows are likely to support growth and the current account balance next year. A relatively more stable external environment is seen as helping a pickup in economic activity starting from FY2020/21.
    • In Sri Lanka, GDP growth is expected to pick up to 3.5 percent in 2019 and to converge towards 4 percent over the forecast horizon. The recovery will be supported by a pickup in the services sector and solid infrastructure investment.  

    World Bank Assistance

    The World Bank approved $10.7 billion in lending to the region for 56 projects in fiscal 2018, including $4.5 billion in IBRD loans and $6.2 billion in IDA commitments, of which $451 million came from the IDA Scale-Up Facility. The Bank also delivered 150 advisory services and analytical products to countries across the region, providing technical advice on issues such as energy sector reform, female labor force participation, and climate change. The Bank’s regional strategy emphasizes sustaining inclusive growth, investing in people, and addressing fragility. It focuses on supporting private sector development and job creation, particularly for women; investing in sustainable cities and climate-smart agriculture; and strengthening inclusion, public institutions, and governance. 

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    Last Updated: Apr 05, 2019


    GNI per capita, Atlas method (current US$)

  • South Asia has had the highest growth rate among the regions since mid-2014.

    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.

    Some recent events are also changing the region's development path, including i) increasing conflict and fragility risks, resulting in displacement surge in Afghanistan and Bangladesh, and impeding regional integration efforts; ii) disorganized and poorly planned urbanization, as reflected in the widespread slums and informal urban settlements, home to at least 130 million people across the region, as well as growing population, congestion, and pollution; and iii) increasing changes in temperature and extreme weather events – with rapid glaciers melt, floods and a growing number of hot spots.

    To respond to these existing and emerging needs, the WBG operational framework for South Asia focuses on three themes: (i) Supporting Sustainable Growth, (ii) Investing in People and (iii) Addressing Fragility.

    To support Sustainable Growth, we are deepening dialogue on the tough structural reforms to create a sustainable macro environment, and an enabling framework for the private sector and job creation. We are prioritizing investments in (i) clean renewable energy (ii) enhancing the livability and growth potential of our iconic cities; as well as decongesting cities and addressing pollution with investments in public transport and (iii) transformational rural growth (promoting climate smart agriculture and agri-business). 

    To strengthen Human Capital as a driver of growth, we are focusing on improving access and quality of education, addressing stunting and malnutrition, expanding support on skills, strengthening health systems and services, improving governance; and supporting safety nets to protect the poorest families. One key priority we are committing to this year is women workforce participation, given its multiplier effect. We are using our engagement in the region to enhance our focus on skills and financial inclusion, as well as improving access to safe transport for women.

    To address Fragility, we are scaling up our engagement on displacement to deal with the recent surge and support basic services and economic opportunity for the refugees, returnees, IDPs and host communities in Afghanistan, Pakistan and Bangladesh. In all South Asian countries, we are working to strengthen public institutions and address governance and corruption risks, including our support to the decentralized governance in Nepal under the newly introduced federalism structure.

    The countries in the region cannot grow alone, and South Asia's integration is essential to sustain current growth in the medium to long-term. Our role in supporting regional cooperation efforts remains critical and we continue working on energy and electricity trade and transport, and pursuing long-term water security in the region.

    Last Updated: Oct 05, 2018


    Gross enrollment ratio, primary, both sexes (%)

  • 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.

    Last Updated: Apr 10, 2019

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South Asia: Exports Wanted



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Contacts

Washington
Elena Karaban
ekaraban@worldbank.org
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