Growth in South Asia Expected to Rise to 6.4% This Year: World Bank

Growth in South Asia is expected to reach 6.4% this year, surpassing earlier predictions and keeping the region as the fastest-growing in the world. According to the World Bank’s latest regional outlook, boosting women’s participation in the workforce and increasing global trade and investment could help the region grow even faster and meet its development goals.

Strong Domestic Demand Drives Growth

The South Asia Development Update titled Women, Jobs, and Growth predicts a broad economic recovery in the region, with strong domestic demand in India and faster recoveries in other countries. The forecast suggests growth will stay robust at 6.2% per year for the next two years. However, risks such as extreme weather, debt issues, and social unrest could affect this outlook. Delays in reforms or poor policy decisions might also slow growth.

Need for Policy Reforms to Maximize Growth Potential

“South Asia has a promising outlook but can achieve even more,” said Martin Raiser, World Bank Vice President for South Asia. He highlighted the importance of policy reforms to integrate more women into the workforce and remove barriers to global trade and investment. Research shows that if female participation in the labor force were equal to men, the region’s GDP could increase by up to 51%.

Low Female Labor Force Participation

Female labor force participation in South Asia is one of the lowest in the world. Only 32% of working-age women were employed in 2023, compared to 77% of men. The gap is particularly noticeable after marriage, with women’s participation dropping by 12 percentage points. Barriers like lack of childcare, unsafe transport, and restrictive gender norms are significant factors limiting women’s employment.

Multi-Pronged Approach Needed for Increasing Women’s Employment

Franziska Ohnsorge, World Bank Chief Economist for South Asia, emphasized that increasing women’s employment will require efforts from everyone, including governments, businesses, and communities. Legal reforms to improve gender equality, creating more jobs, and providing safe transport and childcare are essential steps. Social norms must also become more accepting of women working outside the home.

Trade Openness as a Key Area for Growth

Increasing trade openness is another crucial reform area. Most South Asian countries are not well integrated into global trade, which limits their ability to benefit from changes in global supply chains. Greater openness could help the region grow and create more jobs, particularly for women.

Country Outlooks

• India: Growth is projected at 7.0% in FY24/25, supported by strong agricultural output and job-creating policies.
• Bangladesh: Growth is expected to slow to 4.0% due to uncertainties in investment and industrial sectors.
• Pakistan: Growth could rise to 2.8% as import controls ease and policy rates are cut.
• Sri Lanka: Economic recovery is projected at 3.5%, driven by industrial and tourism rebounds if debt restructuring stays on track.
• Bhutan: Strong growth of 7.2% is expected, supported by a recovery in tourism and public investments.
• Maldives: Modest growth of 4.7% is forecasted, dependent on debt repayments being rescheduled.
• Nepal: Growth could pick up to 5.1% with an expanding hotel sector, more tourists, and a strengthening industrial sector.

In conclusion, while South Asia’s economic prospects are bright, taking the right steps—like integrating more women into the workforce and opening up to global trade—could unlock even greater potential for growth and development in the region.