WASHINGTON, March 31: Prospects of an economic rebound in South Asia are firming up as growth is set to increase by 7.2 % in 2021 and 4.4 % in 2022, climbing from historic lows in 2020 and putting the region on a path to recovery.
But growth is an uneven and economic activity well below pre-COVID-19 estimates, as many businesses need to make up for lost revenue and millions of workers, most of them in the informal sector, still reeling from job losses, falling incomes, worsening inequalities, and human capital deficits say the World Bank in its twice-a-year-regional update.
Released today, the latest South Asia Economic Focus South Asia Vaccinates shows that the region is set to regain its historical growth rate by 2022. Electricity consumption and mobility data are a clear indication of recovering economic activity. India, which comprises the bulk of the region’s economy, is expected to grow more than 10 percent in the fiscal year 2021-22—a substantial upward revision of 4.7 % points from January 2021 forecasts.
The outlook for Bangladesh, Nepal, and Pakistan has also been revised upward, supported by better than expected remittance inflows: Bangladesh’s gross domestic product (GDP) is expected to increase by 3.6% in 2021; Nepal’s GDP is projected to grow by 2.7 % in the fiscal year 2021-22 and recover to 5.1 % by 2023; Pakistan’s growth is expected to reach 1.3 % in 2021, slightly above previous projections.
The improved economic outlook reflects South Asian countries’ efforts to keep their COVID-19 caseload under control and swiftly roll out vaccine campaigns. Governments’ decisions to transition from widespread lockdowns to more targeted interventions, accommodating monetary policies and fiscal stimuli—through targeted cash transfers and employee compensation programs—have also propped up recovery, the report notes.
