World Bank Adjusts South Asia Growth Forecast

By Manoj Kumar and Karin Strohecker
NEW DELHI/LONDON (Reuters) – The World Bank raised its growth forecast for South Asia to 6.4% in 2024 from an earlier estimate of 6.0%, citing robust domestic demand in India and faster recoveries in countries like Sri Lanka and Pakistan.

India's economic growth forecast for the current fiscal year, ending in March 2025, was revised to 7% YoY, up from April's estimate of 6.6%, bolstered by a rebound in agricultural output and increased private consumption.

> “You have an emerging class of consumers in India that's driving the economy forward, along with recoveries from crises in Sri Lanka and Pakistan, and a tourism-led recovery in Nepal and Bhutan,” said Martin Raiser, World Bank Vice President for South Asia, to Reuters.

The upward revision confirms South Asia as the fastest-growing emerging economy region monitored by the World Bank. The Washington-based lender projects South Asia will see robust 6.2% growth annually for the next two years.

Raiser noted significant growth potential with enhanced integration of South Asian countries into the global economy, but stressed the importance of sticking to economic reform programs to maintain momentum.

On Wednesday, India's central bank maintained its GDP growth forecast at 7.2% for the current fiscal year while adopting a neutral policy stance.

The World Bank projected Pakistan's economy would grow by 2.8% for the current fiscal year starting in July, up from 2.3%, aided by a revival in manufacturing and eased monetary policy.

Sri Lanka, emerging from a sovereign debt crisis, saw the largest upward revision, with growth expected at 4.4% this year and 3.5% in 2025.

Nepal's growth forecast increased to 5.1% from 4.6% for the fiscal year beginning mid-July, and Bhutan's to 7.2% from 5.7%.

Conversely, Bangladesh's forecast was downgraded to 4.0% from 5.7% for the fiscal year 2024/25 due to a slowdown in garment exports amid social unrest.

The World Bank recommended boosting women’s labor force participation—currently the lowest globally at 32%. Raising female employment to levels comparable to men could increase output by as much as one-half in the long term, the report states.

> “Bringing more women into the labor force could add significantly to the production potential,” Raiser concluded.