KATHMANDU, Oct 8: After leading global growth for two years, the countries of South Asia have fallen to the second place after East Asia and the Pacific region, according to the World Bank.
The region’s slowdown is due to both temporary shocks and longer-term challenges, the World Bank said.
Issuing South Asia Economic Focus on Sunday, the bank said: “The regional economic growth is expected to slow to 6.9 percent in 2017 from 7.5 percent in 2016, but growth could rebound to 7.1 percent in 2018 with the right mix of policies and reforms.”
The bank publishes the report of economic performances of global growth twice a year. The report has found that the slowdown in South Asia has mostly been driven by internal factors, most notably in India, such as a decrease in private investment and an increase in imports and government spending.
“This edition of the report titled ‘Growth out of the Blue’, has explored the potential of night-time light satellite imagery to improve measurement and understanding of economic activities,” said the bank.
“While growth rates in South Asia largely remain robust given the economic shocks that some countries in the region have faced, countries should continue to actively address their growing trade and fiscal deficits,” said Annette Dixon, vice president of the World Bank South Asia Region.
“With the right mix of policies to respond to challenges, we remain confident that South Asian countries can accelerate their growth to create more opportunities and prosperity for their people,” Dixon added.
The bank further said: “Given its weight in the region, India sets the pace for South Asia. Its Gross Domestic Product (GDP) growth is expected to slow down to 7.0 percent in 2017, due to surging imports and declining private investment along with the effects from withdrawing large amounts of banknotes and the introduction of the Goods and Services Tax (GST).”
However, India’s growth is expected to rebound to 7.3 percent in 2018, according to the bank.
“Nepal has seen an impressive economic recovery after disruptions from earthquakes and a trade blockade. Economic activity is expected to rebound to 7.5 percent in 2017 through increasing government resources, spending, and remittances from abroad. Growth is expected to slow in 2018 due to the heaviest floods in decades, slow recovery of exports, and an increase in lending rates,” the bank said.