Turmoil in Global Capital Markets is a Wake-Up Call for South Asia: World Bank

 

Economic Growth in South Asia will be modest this year and in 2014 with India projected to grow at 4.7% at factor cost in fiscal year 2013-14

According to the South Asia Economic Focus Report of World Bank, South Asia was the second-fastest growing region in the world in the aftermath of the global crisis. However, economic growth in South Asia will be modest this year and in 2014. Regional GDP is projected to grow by 4.4% in the 2013 calendar year. Due to supply-side constraints and weak domestic demand, regional growth has deteriorated in the second and third quarters of 2013. In 2014, GDP is projected to grow at 5.7% and 6.2% in 2015, driven by an improvement in export demand, measures to speed up the implementation of large infrastructure projects in India, stronger private investment activity, and a good monsoon.

Source: PHD Research Bureau, Compiled from World Bank

India is projected to grow by 4.7% at factor cost in fiscal year 2013-14, a slight decline from an estimated 5% real GDP growth in fiscal year 2012-13. The slowdown in the economy has significant spillover effects to the rest of South Asia.

Other countries across South Asia are either growing slowly or slowing down. Overall, South Asia regional growth is expected to moderate in 2013 compared to prior projections.

According to the World Bank, while South Asia countries vary in terms of political, economic and financing challenges, accelerating the long term reform momentum is asserted to be the best policy for coping with turbulent global capital flows rather than dramatic shifts in short term fiscal or monetary policy.

Warm regards,

Dr. S P Sharma