South Asia Economic Outlook
Our Consensus is still for South Asia’s aggregate GDP growth to stay the world’s quickest in 2026, led by India. However, smaller Asian economies will be less peppy, with the Iran war worsening pre-existing headwinds such as relatively tight monetary policy, government austerity and political instability. A long-lasting global energy crisis is a downside risk.
South Asia Inflation
Inflation eased to a multi-year low in 2025 thanks to lower oil and food costs. However, in January–April 2026, South Asian inflation trended up due to lower interest rates and the recent jump in energy costs. For now, our panelists expect inflation to stay below the 10-year trend of 5.5% in 2026, though they have begun to hike their forecasts due to the Iran war.
This chart displays Economic Growth (Real GDP, ann. var. %) for South Asia from 2010 to 2025.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| 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 |
| Public Debt (% of GDP) | 79.9 | 79.2 | 80.3 | 79.6 | 79.4 |
| Policy Interest Rate (%, eop) | 4.59 | 7.29 | 7.85 | 7.17 | 6.15 |
| External Debt (% of GDP) | 22.2 | 21.8 | 22.0 | 22.0 | 22.1 |
| Fixed Investment (ann. var. %) | 15.1 | 7.9 | 4.7 | 6.3 | 7.8 |
| Merchandise Imports (USD bn) | 763 | 886 | 805 | 856 | 922 |
| Merchandise Trade Balance (USD bn) | -260 | -338 | -276 | -328 | -390 |
| Unemployment (% of active population, aop) | 5.9 | 5.2 | 5.1 | 5.2 | 5.2 |
| International Reserves (USD bn) | 679 | 624 | 686 | 714 | 753 |
| Industrial Production (ann. var. %) | 11.3 | 5.8 | 6.2 | 4.0 | 4.1 |
| Current Account Balance (% of GDP) | -1.2 | -2.5 | -0.9 | -0.6 | -0.7 |
| Merchandise Exports (USD bn) | 502 | 548 | 529 | 529 | 532 |
| Inflation (CPI, ann. var. %, aop) | 5.9 | 8.6 | 8.0 | 5.8 | 2.7 |