The Washington-based multilateral lender World Bank has signalled some positives towards the end of March 2022 for a turnaround of the pandemic-affected South Asian economies. This has resulted in a degree of optimism with regard to the region’s future growth.
The latest South Asia Economic Focus titled Shifting Gears: Digitization and Services-Led Development projects the region to grow by 7.1 percent in 2021 and 2022.
India’s economy, South Asia’s largest, is expected to grow by 8.3 percent in the fiscal year 2021-22, aided by an increase in public investment and incentives to boost manufacturing. In Bangladesh, continued recovery in exports and consumption will help growth rates pick up to 6.4 percent in fiscal year 2021-22. In Maldives, GDP is projected to grow by 22.3 percent in 2021, as tourism numbers recover.
“The pandemic has had profound impacts on South Asia’s economy. Going forward, much will depend on the speed of vaccination, the possible emergence of new COVID variants, as well as any major slowdown in the momentum of global growth,” said Hartwig Schafer, World Bank Vice President for the South Asia Region. “While short-term recovery is important, policymakers should also seize the opportunity to address deep-rooted challenges and pursue a development path that is green, resilient and inclusive.”
COVID-19 has left long-term scars on the region’s economy, the impacts of which can last well into the recovery. Many countries experienced lower investment flows, disruptions in supply chains, and setbacks to human capital accumulation, as well as substantial increases in debt levels. The pandemic is estimated to have caused 48 to 59 million people to become or remain poor in 2021 in South Asia.
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