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South Asia Economic Focus, Fall 2017

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Abstract

For eight consecutive quarters South Asia was the fastest-growing region in the world… but not anymore. Despite benign global conditions, regional growth has slowed down. This trend is the result of a deceleration in India, the region’s powerhouse. Short-term disruptions related to the introduction of the landmark Goods and Services Tax can explain the steep decline observed in the last quarter, but the deceleration has been going on for more than one year. Over this period imports increased sharply while private investment declined. Behind these trends lies a combination of large public sector borrowing (especially by the states), relatively sticky interest rates despite decreasing inflation, and an increasingly stressed financial sector. While growth has slightly accelerated elsewhere in the region, concerns remain. Bangladesh has seen an increase in financial sector risks and in Pakistan macroeconomic discipline has weakened. At 6.7 percent, growth is projected to remain strong in South Asia in 2017, albeit slightly lower than forecast in June. The growth rate is expected to stabilize around 7 percent over the medium term. Consumption should remain strong and private investment should regain momentum thanks to ongoing support from infrastructure development and economic reforms. Measuring GDP is especially challenging in developing countries, where the informal sector is large and institutional constraints can be severe. As a result, GDP growth estimates are often met with skepticism. But new technologies offer an opportunity to improve matters. Luminosity observed from satellites has been shown to be a good proxy for economic activity, and methodologies have been developed in recent years to predict GDP over time and across space based on nightlight intensity. In South Asia’s case, GDP predicted using these methodologies closely tracks National Accounts GDP at the aggregate level, and provides a granular picture of GDP at subnational levels. Nightlight intensity also yields new insights on recent economic developments.

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  • World Bank, "undated". "South Asia Economic Focus, Fall 2017," World Bank Publications - Reports 28397, The World Bank Group.
    • Handle: RePEc:wbk:wboper:28397
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    References listed on IDEAS

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    Cited by:

    1. World Bank, 2020. "Managing Groundwater for Drought Resilience in South Asia," World Bank Publications - Reports 33332, The World Bank Group.
    2. GUPTA Monika, 2019. "Decomposing The Role Of Different Factors In Co2 Emissions Increase In South Asia," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 14(1), pages 72-86, April.
    3. Charpe, Matthieu, 2022. "The Economic Impact of Covid-19 and Associated Lockdown Measures in China," MPRA Paper 114861, University Library of Munich, Germany.
    4. Joshi, Deepa & Haque, S. & Nahar, K. & Tania, S. & Singh, J. & Wallace, T., 2022. "Public lives, private water: female ready-made garment factory workers in peri-urban Bangladesh," IWMI Books, Reports H050845, International Water Management Institute.
    5. Martin Rama, 2019. "Challenges in Measuring Poverty and Understanding its Dynamics: A South Asian Perspective," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(S1), pages 2-32, November.

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