The World Bank has said that growth in South Asia is expected to be strong at 6.0 per cent in 2024, driven mainly by robust growth in India.
According to Jobs for Resilience, the latest South Asia Development Update released on Tuesday, in India, which accounts for the bulk of the region’s economy, output growth is expected to reach 7.5 per cent in FY23-24 before returning to 6.6 per cent over the medium term, with activity in services and industry expected to remain robust.
The World Bank report says persistent structural challenges threaten to undermine sustained growth, hindering the region’s ability to create jobs and respond to climate shocks.
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“South Asia’s growth prospects remain bright in the short run, but fragile fiscal positions and increasing climate shocks are dark clouds on the horizon,” said Martin Raiser, World Bank Vice President for South Asia.
“To make growth more resilient, countries need to adopt policies to boost private investment and strengthen employment growth,” he added.
The report also projects a mild recovery in the Pakistan economy with growth projected at 2.3 per cent in FY24-25, while in Sri Lanka output growth is expected to increase to 2.5 per cent in 2025, with recoveries in reserves, remittances, and tourism.
In Bangladesh, output is expected to rise by 5.7 per cent in FY24/25, with high inflation and restrictions on trade and foreign exchange constraining economic activity.
The report recommends a range of policies to spur firm growth and boost employment including increasing trade openness and access to finance, improving business climates and institutions, removing financial sector restrictions, improving education, and removing restrictions on women’s economic activity.
These measures would also help lift growth and productivity and free up space for public investments in climate adaptation, the World Bank says.
Earlier on March 27, Morgan Stanley revised its India GDP growth forecast upwards for the financial year 2024-25 (FY25) to 6.8 per cent, up from its previous estimate of 6.5 per cent.
The firm also revised its growth forecast for the ongoing financial year, FY24, to 7.9 per cent. The revised projections come in the wake of an optimistic outlook on India’s economic trajectory, with Morgan Stanley highlighting the country’s strength and stability as hallmarks of the current cycle.