South Asia Economic Outlook
South Asia’s economy is projected to expand more than any other world region in 2025 due to dynamic economic activity in India. Bangladesh, Pakistan and Sri Lanka will see notably more muted expansions, due to a mix of relatively elevated interest rates, political instability and constrained government spending. “Reciprocal” U.S. tariffs are the key downside risk.
South Asia Inflation
Regional Inflation has roughly halved so far in 2025 to below the world average. Bangladesh, Pakistan and Sri Lanka, which all saw double-digit inflation in recent years, have in 2025 lowered inflation to single digits or—in Sri Lanka’s case—seen deflation. Going ahead, low commodity prices and softer currency depreciation vs past years will check regional inflation.
This chart displays Economic Growth (Real GDP, ann. var. %) for South Asia from 2011 to 2020.
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| Industrial Production (ann. var. %) | -7.0 | 11.3 | 5.8 | 6.2 | 4.0 |
| Unemployment (% of active population, aop) | 5.9 | 5.7 | 5.3 | 5.6 | 5.7 |
| Fiscal Balance (% of GDP) | -8.6 | -6.4 | -6.4 | -5.6 | -4.8 |
| Public Debt (% of GDP) | 82.1 | 78.1 | 77.5 | 77.4 | 76.9 |
| Inflation (CPI, ann. var. %, aop) | 6.4 | 5.9 | 8.6 | 7.9 | 5.7 |
| Policy Interest Rate (%, eop) | 4.35 | 4.59 | 7.27 | 7.81 | 7.14 |
| International Reserves (USD bn) | 644 | 679 | 624 | 686 | 714 |
| External Debt (% of GDP) | 23.8 | 22.2 | 21.4 | 21.3 | 21.5 |
| Current Account Balance (% of GDP) | 0.4 | -1.2 | -2.4 | -0.9 | -0.6 |
| Merchandise Exports (USD bn) | 357 | 502 | 548 | 528 | 528 |
| Merchandise Imports (USD bn) | 503 | 762 | 886 | 809 | 856 |
| GDP per Capita (USD) | 1,906 | 2,211 | 2,320 | 2,427 | 2,582 |
| Economic Growth (Real GDP, ann. var. %) | -4.3 | 8.9 | 7.2 | 7.9 | 5.9 |
| Private Consumption (annual variation in %) | -4.2 | 10.9 | 7.3 | 4.8 | 6.9 |
| Investment (annual variation in %) | -5.9 | 15.1 | 7.9 | 5.9 | 6.3 |