The World Bank's biannual regional outlook has forecasted robust growth for South Asia, reaching 6.0% in 2024, primarily driven by India's strong performance and the recovering economies of Pakistan and Sri Lanka.
However, despite this optimistic projection, the region faces persistent structural challenges that threaten its ability to sustain growth, generate employment, and withstand climate shocks.
The outlook for individual countries within the region varies:
- Bangladesh: Expected growth of 5.7% in FY24/25
- Bhutan: Economy forecasted to expand by 5.7% in the same period
- India: Projected growth of 7.5% in FY23/24, returning to 6.6% in the medium term
- Pakistan: Anticipated growth rate of 2.3% in FY24/25 due to improved business confidence
- Sri Lanka: Output growth expected to strengthen to 2.5% in 2025, driven by recoveries in reserves, remittances, and tourism
The World Bank's "Jobs for Resilience" Update projects South Asia to remain the world's fastest-growing region, with a 6.1% growth forecast for 2025. However, it warns of lingering challenges: growth in most countries lags behind pre-pandemic levels and private investment has slowed, posing hurdles for job creation amid a burgeoning working-age population.
Martin Raiser, World Bank Vice President for South Asia, said, "South Asia's growth prospects remain promising in the short term, but fiscal vulnerabilities and escalating climate-related disasters cast a shadow over the horizon. To fortify growth resilience, countries must enact policies that stimulate private investment and bolster employment generation."
In 2023, South Asia's employment ratio stood at 59%, significantly lower than the 70% observed in other emerging market and developing economy regions. Notably, South Asia is the only region witnessing a decline in the employment of working-age men over the past two decades and exhibits the lowest share of working-age women in employment.
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