South Asia Economic Outlook
Our panelists still see South Asia’s GDP growth topping the world league table this year, led by India. That said, smaller regional economies will be duller, with the Iran energy shock worsening pre-existing drags like tight monetary policy and political instability. Downside risks include the El Niño weather pattern plus a prolonged Iran energy shock.
South Asia Inflation
Inflation cooled to a multi-year low in 2025, as oil and food costs fell. That said, in January–June 2026, regional inflation rates increased as energy costs soared. Our panel now projects inflation to hit the prior decade’s average of 5.5% in 2026 as a result of the Iran war, and poor harvests due to El Niño are an upside risk.
This chart displays Economic Growth (Real GDP, ann. var. %) for South Asia from 2010 to 2025.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Industrial Production (ann. var. %) | 11.3 | 5.8 | 6.2 | 4.6 | 4.2 |
| Unemployment (% of active population, aop) | 5.9 | 5.2 | 5.1 | 5.2 | 5.2 |
| External Debt (% of GDP) | 22.2 | 21.8 | 22.0 | 22.0 | 21.8 |
| Public Debt (% of GDP) | 85.0 | 84.5 | 84.9 | 83.8 | 83.2 |
| Merchandise Imports (USD bn) | 763 | 886 | 805 | 857 | 922 |
| Current Account Balance (% of GDP) | -1.2 | -2.5 | -0.9 | -0.6 | -0.4 |
| Private Consumption (ann. var. %) | 10.9 | 7.3 | 5.0 | 6.9 | 7.1 |
| GDP per Capita (USD) | 2,202 | 2,260 | 2,341 | 2,491 | 2,576 |
| Economic Growth (Real GDP, ann. var. %) | 8.9 | 7.2 | 7.9 | 5.9 | 6.9 |
| Fiscal Balance (% of GDP) | -6.4 | -6.6 | -5.8 | -5.0 | -4.3 |
| Policy Interest Rate (%, eop) | 4.59 | 7.29 | 7.85 | 7.17 | 6.15 |
| Fixed Investment (ann. var. %) | 15.1 | 7.9 | 4.7 | 6.3 | 7.8 |
| Merchandise Trade Balance (USD bn) | -260 | -338 | -276 | -328 | -390 |
| International Reserves (USD bn) | 679 | 624 | 686 | 714 | 753 |
| Merchandise Exports (USD bn) | 502 | 548 | 529 | 529 | 532 |
| Inflation (CPI, ann. var. %, aop) | 5.9 | 8.6 | 8.0 | 5.8 | 2.7 |