World Bank raises South Asia growth forecast to 6.4%, says Pakistan saw rapid recovery

• WB revises India’s economic growth to 7% YoY.
• “You have recovered from crises in Sri Lanka, Pakistan.”
• Bangladesh’s growth forecast was downgraded to 4.0%.

The World Bank raised its forecast for South Asia’s growth to 6.4% in 2024 from a previous estimate of 6%, citing strong domestic demand in India and faster recovery in crisis-hit 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 year-on-year from an April estimate of 6.6 percent, helped by a rebound in agricultural output and increased private consumption.

“You have an emerging consumer class in India that is driving the economy forward, you have recoveries from crises in Sri Lanka and Pakistan, you also have a tourism-driven recovery in Nepal and Bhutan,” said Martin Raiser, Vice President of Global Bank South Asia, told Reuters.

The upward revision confirms South Asia as the fastest growing emerging economy region tracked by the World Bank. The Washington-based lender projects in South Asia to see strong growth of 6.2% annually over the next two years.

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

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

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

Sri Lanka, which is seeking to emerge from a sovereign debt default and the worst economic crisis in decades, saw the biggest upward revision, with growth expected to reach 4.4% this year and 3.5% in 2025 .

Nepal’s growth forecast rose to 5.1% from 4.6% for the 2024/25 fiscal year starting in mid-July and Bhutan’s to 7.2% from 5.7%.

But Bangladesh’s growth forecast was downgraded to 4.0 percent from 5.7 percent for the 2024/25 fiscal year, which runs 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 percent. Raising employment among women to levels comparable to that of men could increase output by up to half in the long run, the report said.

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