Led by robust growth in India, South Asia remains the world’s fastest growing region despite turbulence elsewhere, the World Bank said in its biannual report.
Limited exposure to the global turbulence and increasing investment in the region were the key to its continuing growth, said the World Bank’s “South Asia Economic Focus”.
The region will grow from 7.1% in 2016 to 7.3% in 2017. But the party is not likely to last forever. The bank warned of “fading tailwinds”: “Capital flows to the region have declined and remittances from oil exporting countries have started to weaken. Fuel and food prices remain low but are unlikely to keep falling.
“As a result overall output growth is slower than previously anticipated and inflation has recently been creeping up.”
But as the largest economy in the neighbourhood, the report said, “India sets the pace for South Asia”.
The Indian economy is expected to accelerate from 7.5% in 2016 to 7.7% in 2017, the report said, based on “the expectation of strong private investment, a push in infrastructure spending, an improved investment climate, and deleveraged corporate and financial balance sheets”.
The World Bank estimates are aligned mostly with India’s own growth projections, which were put in the region of 7 to 7.75% for 2016-17 by RBI’s Economic Survey.