World Bank Releases Biannual South Asia Economic Focus Report
According to the World Bank’s biannual report, South Asia Economic Focus, South Asia has regained its lead as the fastest growing region in the world. Released on Sunday, the World Bank’s SAEF report synthesizes recent economic developments in the South Asia region to formulate a prediction for its future growth.
The Spring 2018 edition forecasts a generally positive progression for South Asia’s economy, estimating an accelerated growth rate of 6.9% for 2018 and 7.1% in 2019. Additionally, the report states that South Asia may be able to extend its growth lead over East Asia and the Pacific regions.
However, the report notes that much of South Asia’s economic growth is a result of India’s economic recovery, possibly pointing to a disproportionate reliance on the country.
India’s growth rate is expected to shoot up to 7.3% this year, and 7.5% in the next fiscal year. India’s recent demonetization and implementation of the goods and service tax (GST) created short-term setbacks in economic activity, according to the report. Nevertheless, India has made moves forward in its recovery process that have substantially rebalanced growth. Private consumption will remain the main driver of India’s economic activity, while its industrial and service sectors are predicted to boost production growth.
In order to maximize growth potential, India should accelerate exports and investment, as per the Bank’s recommendations.
Another concern addressed by the report is the possibility that South Asia may be experiencing jobless growth. This worry specifically pertains to the actual job-creating potential of South Asian countries.
Despite the number of working-age population increasing, employment data from 2005 to 2015 has shown a much faster decline in employment rate for South Asia than for East Asia, especially for women.
According to Robert Beyer, author of the report, “Growth is important, but even very high growth will alone not be enough to increase South Asia’s employment rate. Policies and actions are needed to make growth more labor-intensive, and especially to create the kinds of jobs that can encourage greater labor force participation by women.”
To prevent further declines in employment rates across South Asia, the report estimates that the nations of South Asia would need to generate 11.7 million jobs per year. However, even generating 11.7 million jobs would not be enough for South Asia to match the employment rates of other developing regions with similar income levels.
The report ends with a general nod towards researching economic policies designed to promote job creation in South Asia. Ultimately, a leading growth rate bodes well for South Asia’s economy, but it will not be enough to help the region catch up to its neighbors in terms of employment.