South Asia Economic Outlook
Growth in the South Asian economy will be below its 10-year pre-pandemic average (6.5%) this year due to a tougher base effect and a weak global economy. Momentum is likely to decelerate most notably in Pakistan due to recent floods. Nonetheless, Bangladesh and India will remain among Asia’s top performers. Social unrest and extreme weather are risks.
South Asia Inflation
Regional inflation rose to 9.2% in January from 8.6% in December on faster price increases in India and Pakistan. Price pressures were stoked by higher food price pressures. Regional inflation should soften this year on cooling commodity prices, but will remain high due to subsidy cuts and weak currencies. Further FX depreciation and subsidy cuts pose risks.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| GDP per Capita (USD) | 1 | 1 | 2 | 1 | 2 |
| Economic Growth (GDP, ann. var. %) | 6.5 | 6.5 | 3.9 | -5.0 | 8.2 |
| Private Consumption (ann. var. %) | 6.1 | 7.6 | 4.8 | -4.7 | 8.0 |
| Fixed Investment (ann. var. %) | 8.0 | 9.9 | 1.6 | -8.5 | 13.9 |
| Industrial Production (ann. var. %) | 4.8 | 5.0 | 0.5 | -6.9 | 10.9 |
| Unemployment (% of active population, aop) | 5.0 | 5.1 | 5.5 | 5.9 | 5.7 |
| Fiscal Balance (% of GDP) | -3.8 | -3.8 | -5.1 | -8.6 | -6.5 |
| Public Debt (% of GDP) | 65.5 | 66.4 | 71.4 | 82.6 | 78.8 |
| Inflation (CPI, ann. var. %, aop) | 4.0 | 3.9 | 5.3 | 6.4 | 5.9 |
| Policy Rate (%, eop) | 5.97 | 6.28 | 5.20 | 4.30 | 4.30 |
| Current Account Balance (% of GDP) | -2.1 | -2.5 | -1.2 | 0.6 | -1.5 |