World Bank Raises South Asia Growth Outlook

(RTTNews) - The World Bank lifted its growth projection for South Asia citing strong domestic demand in India and faster recoveries in most other countries in the region.

In its twice-yearly regional outlook, released Thursday, the World Bank said South Asia will expand 6.4 percent in 2024 compared to 6.0 percent estimated previously in April. The growth outlook for the next year was raised to 6.2 percent from 6.1 percent.

The region is forecast to expand again by 6.2 percent in 2026.

However, the lender cautioned that the forecast is subject to downside risks including extreme weather, debt distress, and social unrest.

South Asia's outlook is undoubtedly promising, but the region could do more to realize its full economic potential," World Bank Vice President for South Asia Martin Raiser said.

"Key policy reforms to integrate more women into the workforce and remove barriers to global investment and trade can accelerate growth," Raiser added.

Growth in India is projected to reach 7.0 percent in FY24/25 with larger-than-expected agricultural output and policies to foster employment growth contributing to strong private consumption growth.

In Bangladesh, output growth is expected to slow to the range of 3.2 to 5.2 percent in FY24/25.

Bhutan's economy is expected to grow 7.2 percent in FY24/25, boosted by faster-than-expected recovery in tourism and strong public investment at the beginning of a new five-year plan.

Growth in Maldives is projected to remain moderate at 4.7 percent in 2025. In Nepal, growth is projected to improve to 5.1 percent in FY24/25 amid an expanding hotel sector, growing tourist arrivals and strengthening industrial sector.

Pakistan continued its economic recovery as the relaxation of import controls and projected policy rate cuts are expected to lift growth to 2.8 percent in FY24/25, the lender said.

In Sri Lanka, output is expected to grow 3.5 percent next year, on the back of stronger-than-expected rebound in industrial activity and tourism, if debt restructuring and planned reforms remain on track.