New Delhi, June 7 (IANS) The South Asian economy, led notably by a strong recovery in India and the re-bound in other economies, is expected to log a 7 percent growth this year and 8 percent the next year, the World Bank said in a report Monday.
‘The region’s prospective growth is close to pre-crisis peak levels and faster than the high rates of the early part of the decade,’ said the Washington-based multilateral lending institution in its first assessment this year of South Asian economies.
‘The recovery is being led by rising domestic confidence and is balanced in terms of domestic versus external demand, consumption versus investment, and private demand versus reliance on stimulus,’ the report said.
‘The role of India will be central to improve integration opportunities for smaller neighbours as they respond. While the gains for India are smaller, the gains for smaller neighbours are much bigger.’
The South Asian region is made up of India, Bangladesh, Pakistan, Sri Lanka, Bhutan, Maldives, Nepal and Afghanistan.
The report said nearly 80 percent of the region’s gross domestic product originates in India, which is South Asia’s fastest-growing and biggest economy, with Pakistan and Bangladesh accounting for another 10 and 7 percent, respectively.
The report also warned that while prices in India were expected to moderate in the near-term, a renewed focus on agriculture was vital, especially given the persistently high rural populations and poverty.
This apart, it said a rise in insecurity and conflict was evident in the region especially since 2001 and added: ‘The good news is that peace building can also provide large dividends for growth and trade that are mutually reinforcing.’
The other salient points of the 90-page report are:
-The rebound since March 2009 has been strong, and is comparable to that in East Asia
-Government policy, external support, private spending and global recovery are driving the rebound
-Strong, timely policy interventions were and remain key to confidence and recovery
-South Asia’s strengths and lack of global integration a key reason that allowed greater resilience
-Region weathered the global shocks much better than expected
-Governments must managing recovery, create fiscal space, contain inflation and boost agriculture
-Sustaining inclusive and faster growth will be new drivers of growth
-Another driver will be rise of a globally competitive manufacturing sector
-Economies must integrate more closely within the region and with each other
-Governments must address concerns about security and insecurity to fulfil full potential