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South Asia’s recovery continues as global demand rebounded and targeted containment measures helped minimise the economic impact of the recent waves of COVID-19, according to the latest biannual regional update released by the World Bank, which said the recovery, however, remains fragile and uneven, and most countries are far from pre-pandemic trend levels.
The latest South Asia Economic Focus, titled ‘Shifting Gears: Digitisation and Services-Led Development’, projects the region to grow by 7.1 per cent in 2021 and 2022. While the year-on-year growth remains strong in the region, albeit from a very low base in 2020, the recovery has been uneven across countries and sectors.
South Asia’s average annual growth is forecast to be 3.4 per cent over 2020-23, which is 3 percentage points less than it was in the four years preceding the pandemic.
South Asia’s recovery continues as global demand rebounded and targeted containment measures helped minimise the economic impact of the recent waves of COVID-19, according to the latest biannual regional update released by the World Bank, which said the recovery, however, remains fragile and uneven, and most countries are far from pre-pandemic trend levels.
India’s economy, South Asia’s largest, is expected to grow by 8.3 per cent 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 per cent in fiscal 2021-22.
In Maldives, GDP is projected to grow by 22.3 per cent in 2021, as tourism numbers recover, the World Bank said in a press release.
“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,” he added.
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, the World Bank said.
As countries build back, they have a chance to rethink their long-term development models. With the emergence of new digital technologies, South Asia has an opportunity to shift gears from a traditional manufacturing-led growth model and capitalise on the potential of its services sector.
Fibre2Fashion News Desk (DS)
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