World Bank claims South Asia growth fastest in next 2 years

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According to World Bank, South Asia is expected to remain the fastest-growing region in the world for the next two years.

World Bank on Tuesday, said the growth in the region is expected to be strong at 6.0% in 2024, which is mainly driven due to the robust growth in India and recoveries in Pakistan and Sri Lanka.

Despite this, the bank said claimed "persistent structural challenges" threatened to undermine the sustained growth that could hinder the region's ability to create jobs and respond to climate shocks.

While South Asian region is expected to observe an overall growth of 6.1% in 2025, the growth is still below pre-pandemic levels in most countries in the region, while majority of these countries are reliant on public spending.

The bank added that private investment growth has slowed "sharply" in all South Asian countries, and added the region is not creating enough jobs to keep pace with increasing working-age population.

"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."

South Asia's working-age population growth has exceeded that in other developing regions, World Bank added. According to the bank, the employment ratio for South Asia was 59% in 2023, compared to 70% in other emerging market and developing economy regions.

As per World Bank, South Asia is also the only region where the share of working-age men who are employed, fell over the past two decades. It is also the region with the lowest share of working-age women who are employed.

"South Asia is failing right now to fully capitalize on its demographic dividend. This is a missed opportunity," said Franziska Ohnsorge, World Bank Chief Economist for South Asia.

"If the region employed as large a share of the working-age population as other emerging markets and developing economies, its output could be 16% higher."

While the bank projects productivity output of Bangladesh and Bhutan to increase by 5.7% in the fiscal years of 2024 and 2025, India's output growth is expected to reach 7.5% in the fiscal years of 2023 and 2024 before returning to 6.6% over the medium term.

For Nepal, Pakistan and Sri Lanka the output growth is expected to increase by 4.6%, 2.3% and 2.5% respectively.

On the other hand, the output growth in Maldives is expected to be 4.7% this year, which is a half-percentage point downgrade from previous forecasts. World Bank said this was because tourists are shifting from high-end resorts toward lower-cost guesthouses.