South Asia Development Update April 2024

Jobs for Resilience

South Asia is expected to remain the world’s fastest-growing region, thanks to robust growth in India. However, this strong outlook is deceptive. For most countries, growth is still below pre-pandemic levels and is more reliant on public spending than elsewhere. At the same time, private investment remains weak and the region is not creating enough jobs to keep pace with its rapidly increasing working-age population. To make growth more resilient and sustained, countries need to adopt policies to boost private investment and strengthen employment growth. Measures to spur firm growth and boost employment will help lift growth and productivity and free up space for public investments in climate adaptation.

Main Messages

  • SADU April 2024_Chp1_Deceptive Strength
    Chapter 1. Deceptive Strength

    Output growth in South Asia, projected at 6.0–6.1 percent in 2024–25, continues to exceed that in other emerging market and developing economies, but this is largely due to strong growth in India. In the rest of the region, while picking up, it is expected to remain mostly well below pre-pandemic averages. More than in other emerging market and developing economies, growth is being driven by the public sector. Many of the underlying vulnerabilities that had previously caused balance-of-payments pressures remain, and point to downside risks to growth. Stronger job creation and the easing of financial market restrictions could help boost growth, private investment, and government revenues and put in place conditions conducive to climate adaptation.

  • SADU April 2024_Box 1_Private Investment
    Box 1.1 Accelerating Private Investment

    Private investment growth has slowed sharply from pre-pandemic averages in all South Asian countries, hampering the region’s efforts to meet development and climate objectives. Historically, sustained accelerations in private investment were most likely to occur when institutional quality was strong, the real exchange rate was competitive, and economies were more open to trade and capital flows.

  • SADU April 2024_Spotlight_Climate Adaptation
    Spotlight. Who Bears the Burden of Climate Adaptation and How?

    South Asia is highly vulnerable to climate change. However, severely constrained fiscal positions will limit the scope for public policies to facilitate climate change adaptation. This means that the burden of adaptation will fall disproportionately on firms, farmers, and households and, especially, poor households, which typically suffer greater damage from climate shocks. A comprehensive and systematic review of climate change research identifies a variety of adaptation strategies used by households, firms, and farmers, which have offset 46 percent of climate damage, on average. Firms have access to the most effective adaptation strategies, typically technology-related, whereas the least effective strategies are employed by households and farmers, often in the form of labor market adjustments.

  • SADU April 2024_Chp2_Jobless Development
    Chapter 2. Jobless Development

    South Asia’s labor markets stand out among EMDEs for having suffered for decades from declining employment ratios (that is, employment relative to the total working-age population) and exceptionally low shares of women in employment. While agriculture has shed labor, as it has in other EMDEs, the non-agriculture sector has been unusually slow in creating jobs. This partly stems from challenging institutional and economic environments that have held back firms’ growth. As a result, the region has relied on labor productivity and population growth as engines of output growth. However, working-age population growth is expected to slow, and labor productivity growth has already slowed sharply since the COVID-19 pandemic. Sustaining growth will require increasing employment ratios, especially in the non-agriculture sector and among women, through measures to remove obstacles to growth for businesses, increase openness to international trade, ease labor market and product market restrictions, build human capital, and strengthen equality of women’s rights.

The World Bank’s latest economic outlook explores growth prospects for South Asia and provides analysis on how the region can benefit from the green energy transition.

Charts & Data

Output growth

Growth in South Asia is expected to exceed that in other emerging markets and developing economies (EMDEs), but much of this strength is attributable to India.

SADU April 2024_Killer charts_Chp1

Sources: MPO (database); World Bank.
Note: The regional aggregate is weighted using annual U.S. dollar GDP (at average 2010-19 prices and market exchange rates).

Private investment

In South Asia, private investment makes up a smaller share of GDP than other EMDEs. Strong private investment is critical to boosting labor productivity and improving energy efficiency.

SADU April 2024_Killer charts_Box1.1

Sources: World Development Indicator (database); World Bank.
Note: EMDEs = emerging market and developing economies; SAR = South Asia Region. Figure shows private fixed investment as a share of GDP. "Latest data” refers to 2021.


Adaptation ratio

On average, adaptation strategies that leverage public goods and technologies are found to be the most effective at offsetting damage from climate shocks.


Source: Rexer and Sharma (2024); World Bank.
Note: Adaption ratio is the share of the damage from a climate shock that is offset by adaptation. The bars represent the mean adaptation ratios disaggregated by adaptation mechanism type. The yellow lines represent 95 percent confidence intervals. The total sample consists of 118 estimates from 52 papers included in the meta-analysis of adaptation in Rexer and Sharma (2024). Adaptation ratios measure the share of climate damage that is offset by climate adaptation. Technical details are explained in Rexer and Sharma (2024).


Employment ratio

Despite a rebound since 2020, South Asia's employment growth has fallen short of working-age population growth.

SADU April 2024_Killer charts_Chp2

Sources: International Labour Organization; Penn World Tables (database); World Bank; World Development Indicators (database).
Note: Sample comprises 128 EMDEs. SAR here = Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Employment ratios are defined as employment in percent of the working-age population. Working-age population = persons aged between 15 and 64. Working-age population-weighted.



  • Soil cracked in the drought.
    Climate change adaptation: A systematic review in five charts

    South Asia is highly vulnerable to climate change—including floods, extreme heat, and sea level rise. The burden of adapting to climate change falls disproportionately on poor households, which are typically more vulnerable to climate shocks.

  • Group of technician and engineer working in mobile manufacturing factory
    Jobs for development: Create jobs to jump-start a missing engine of growth and development

    South Asia did not create nearly enough jobs during 2000-23 to keep pace with its growing working-age population. As a result, its employment ratio (employment relative to the working-age population) declined, while the average employment ratio of other emerging market and developing economies (EMDEs) held steady.

  • Male farmers
    Deceptive strength: South Asia’s outlook in five charts

    In South Asia, output growth remains stronger than in other emerging market and developing economies, largely due to strong growth in India. Growth in the rest of the region is picking up, but in most countries it is expected to remain well below pre-pandemic averages, and is insufficient to make progress toward advanced-economy per capita income levels.

  • Female farmer
    Toward greater resilience and sustained growth in South Asia

    Ten years ago, Northern Bangladesh was hit by severe and relentless monsoon rains. The rivers burst their banks, hundreds of villages went under water, entire crops were lost, half a million people were made homeless, and millions more were affected in other ways. Households in the impacted regions faced rising food insecurity.

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