World Bank raises South Asia growth forecast to 6.4% at India’s Reuters request

By Manoj Kumar and Karin Strohecker

NEW DELHI/LONDON (Reuters) – The World Bank raised its growth forecast for South Asia to 6.4 percent in 2024 from an earlier estimate of 6.0 percent, citing strength in domestic demand in India and faster recoveries in crisis affected countries such as Sri. Lanka and Pakistan.

India’s economic growth forecast for the current fiscal year ending March 2025 was revised up to 7 percent annually, up from April’s estimate of 6.6 percent, helped by a rebound in agricultural output and rising private consumption.

“You have an emerging consumer class in India driving the economy forward, you have recoveries from the crises in Sri Lanka and Pakistan, you also have a tourism-led recovery in Nepal and Bhutan,” Martin Raiser, the World Bank’s vice president for South Asia, said told Reuters.

The upward revision confirms South Asia as the fastest growing emerging economy region monitored by the World Bank. Lenders in Washington expect South Asia to grow at a robust 6.2 percent annually over the next two years.

Raiser said there is “significant upside potential” for growth with greater integration of South Asian countries into the global economy, but countries need to stick with economic reform programs to maintain momentum.

On Wednesday, India’s central bank kept its GDP growth forecast at 7.2 percent for the current fiscal year and changed its policy stance to neutral.

The World Bank estimated that Pakistan’s economy will grow by 2.8 percent in the current fiscal year that began in July, up from a previous estimate of 2.3 percent, supported by a recovery in manufacturing and easing of monetary policy.

Sri Lanka, which is clawing its way out of a sovereign debt default and its worst economic crisis in decades, saw the biggest upward revision, with growth expected to reach 4.4 percent this year and 3 .5% in 2025.

Nepal’s growth forecast was raised to 5.1% from 4.6% for the 2024/25 fiscal year as of mid-July, and Bhutan’s to 7.2% from 5.7%.

But Bangladesh’s growth forecast was cut to 4.0 percent from 5.7 percent for the 2024/25 fiscal year from July to June, reflecting a slowdown in garment exports amid recent social unrest.

The World Bank has recommended that the region boost female labor force participation – currently the lowest globally at 32%. Raising employment among women to levels comparable to men’s could increase output by up to half over the long term, the report said.

“Getting more women into the workforce could add significantly to manufacturing potential,” Raiser said.