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Overview

Growth in South Asia is expected to increase to 6.4 percent this year, exceeding earlier projections and keeping the region on track to be the fastest growing in the world. Unlocking untapped potential by increasing women’s participation in the labor force and opening further to global trade and investment could help the region grow even faster and achieve its development goals.

The latest South Asia Development Update Women, Jobs, and Growth forecasts a broad-based upturn in the region, supported by strong domestic demand in India and faster recoveries in most other South Asian countries. Growth is expected to remain robust at 6.2 percent a year for the next two years.

This forecast is subject to downside risks including extreme weather, debt distress, and social unrest. Policy missteps such as delays in planned reforms could also set the region back. Fragile fiscal and external positions leave little buffer against these risks.

Country Outlooks

The economic outlook for all South Asian countries except Bangladesh and Maldives has been upgraded from six months ago. In Bangladesh, output growth is expected to slow to the range of 3.2 to 5.2 percent (with a mid-point of 4 percent) in FY24/25, as significant uncertainties are expected to keep investment and industrial growth subdued while agriculture growth is expected to moderate following the recent floods. Bhutan’s economy is expected to grow by 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 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 Maldives, output growth is expected to remain modest at 4.7 percent in 2025, if major bilateral government debt repayments can be rescheduled. In Nepal, growth is projected to pick up to 5.1 percent in FY24/25 amid an expanding hotel sector, growing tourist arrivals and strengthening industrial sector. Pakistan continues 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. In Sri Lanka, output is expected to grow 3.5 percent in 2025, on the back of stronger-than-expected rebound in industrial activity and tourism, if debt restructuring and planned reforms remain on track.

Last Updated: Oct 10, 2024

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Last Updated: Oct 10, 2024

GNI per capita, Atlas method (current US$)

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