South Asia is poised to be the world’s fastest-growing region in 2023, with the World Bank forecasting a robust growth rate of 5.8%. This positive outlook stands in contrast to gloomy projections for China and East Asia, which are expected to experience some of the slowest growth rates in the past five decades.
Franziska Ohnsorge, the World Bank’s chief economist for South Asia, attributes the region’s strong growth prospects to its youthful and expanding workforce, as well as its potential for catch-up growth. However, she cautioned that this growth rate may not be sufficient to help South Asian governments achieve their goal of attaining high-income status within a single generation.
Presently, the average per capita income in South Asian countries hovers around $2,000, a mere fraction of high-income nations. To attain high-income status, South Asian nations would need to maintain average annual growth rates of at least 8% over several decades.
Ohnsorge emphasizes that South Asian countries must focus on stimulating private investment and generating employment opportunities for their burgeoning populations to achieve such ambitious growth targets.
Furthermore, she highlights that the region is exposed to various challenges, including the impacts of climate change, reduced global demand, and high levels of debt.
Despite these challenges, Ohnsorge sees reasons for optimism in South Asia. The region possesses several competitive advantages, including its youthful labor force, expanding middle class, and strategic geographical location.
She concludes, “If South Asian countries can continue to implement reforms and attract investment, they can achieve their development goals.”
