Description

The macroeconomic outlook for South Asia is expected to be relatively strong in 2019 on account of infrastructural development and investments. Nevertheless, the outlook doesn’t look great in terms of even higher growth as a result of a trade war between two economic giants, the United States and China, affecting the region. The growth pattern is divergent among the nations with positive growth in nations such as Bhutan, Bangladesh, Nepal, Afghanistan, and the Maldives and declining growth of India, Pakistan, and Sri Lanka in 2019. Private consumption is increasing as the purchasing power of people is rising. The countries in the region are keen to improve FDI with various legislative and tax reforms. As a result, the 6 economies were able to attract more foreign investments in 2019 except for Pakistan. However, Pakistan is also increasing business confidence by improving its ease of doing business (EoDB) score. The South Asian population is expected to increase moderately over the forecast period. The region falls under fossil fuel importing nation for meeting the energy needs, so the nations are opting for renewable energy to combat their dependency on imports for energy and also mitigating greenhouse gases.

Country Coverage: South Asia
Afghanistan
Bangladesh
Bhutan
India
Maldives
Nepal
Pakistan
Sri Lanka

Sector Coverage: economic indicators, employment, demographics, education, infrastructure, and competitiveness

Indicator coverage: Gross domestic product (GDP) and its components, GDP growth, export and import, foreign direct investment, inflation, exchange rate, value add by sectors, labor force, employment, and unemployment rate, population and demographics, adult and youth literacy rate, crude oil consumption, crude oil import and export, electricity generation and consumption, renewable energy, global competitiveness index, ease of doing business index, corruption perception index, bribe payers index, political stability, and human development index.

Yearly Data: 2015 to 2025

Afghanistan
The GDP growth of Afghanistan is expected to reach 3% in 2019 and further accelerate up to 5.5% in 2025. As a developing nation, the share of private consumption is expected to be 85% of the GDP in 2019; however, the rate is estimated to reach 65% in 2025 while the share of export is expected to increase from 8% in 2018 to 23% in 2025, which suggests that the economy will improve. With the minuscule central bank policy rate, inflation is expected to rise in the forecast period. The nation improved its foreign investment ratio in 2018 and is continuing to do so by introducing various infrastructure projects including 4 special economic zones (SEZ).

Bangladesh
The Bangladeshi economy is expected to close 2019 at 8% annual GDP growth and slow down to 7.4% in 2020. The growth will be supported by increasing exports and strong domestic demand, with increasing inflows in remittance expected. The readymade garment sector is expected to remain the top exported product in the country. The inflation rate is expected to pick up to marginally in 2020, due to the introduction of new VAT reforms and hike in the electricity tariff. The unemployment rate is expected to decline marginally with the ongoing increase in demand for the labor force in labor-intensive industries.

Bhutan
The Bhutanese GDP growth is expected to be greater than the global growth rate at 5.5% in 2019 and expected to boost by 7.21% in 2020. on account of decreasing poverty, the private consumption of Bhutan is expected to rise from 56% in 2018 to 62% by 2025. In the forecasted period, the government is also expected to spend more on infrastructural development reaching 24% of GDP by 2025 for government consumption from 19% of GDP in 2018. Due to the increase in food prices, inflation is expected to increase in the forecasted period as the human capital of Bhutan is reluctant to take agriculture as a profession.

India
The fifth-largest economy in the world (in terms of nominal GDP), India, derailed from 6.8% in 2018 to 4.8 % in 2019, as a result of plummeting private consumption, stagnant investment, and sluggish growth of the manufacturing sector. The government has been adopting monetary and fiscal expansionary measures, since the beginning of 2019, slashing key interest rates multiple times in the year and reducing the corporate tax. The trailed effect of the policy interventions is expected to finally encourage spending and borrowing in 2020. Furthermore, the country has introduced heavy multiple investment projects for the 2020 to 2025 period to prompt both government and private investment. Alongside, pursuance of liberal FDI policies, allowing 100% foreign ownership across numerous sectors, is expected to drive foreign investor confidence and investment. Overall, the economy is expected to thereby gain momentum, grow by an estimated 5.7% in 2020 and support further GDP growth in the 2021 to 2025 period.

Maldives
The economy is estimated to remain robust at 6.5% in 2019 and forecast to grow by 5.5 to 6% between 2020 and 2025 due to the persistent boost from tourism, commerce, and construction sectors. The country continues to leverage the tourism sector, which primarily drives the economy. Infrastructure projects inclined towards the expansion and development of the international airport and domestic airports and the revival of the lease of inhabited lands for tourism purpose, coupled with the government’s plan to build numerous resorts between 2019 and 2023, is expected to enhance the country’s label of a hot tourism destination. Subsequently, the investment in the tourism sector is expected to be elevated in between 2020 and 2025 period. However, the high youth unemployment rate remains a downside to the country’s economy. Ease of imports of construction material slightly shrank the trade deficit in 2019, but it is expected to widen again after 2020 as other infrastructure projects gradually unfold and increase related imports. Alongside, a fall in unemployment rates and a rise in private consumption is expected to support the economy.

Nepal
The growing economy of Nepal is expected to strengthen in 2020 as the government’s visit Nepal 2020 policy has increased tourism-related activities. The GDP is expected to increase to $51.9 billion by 2025 from an estimated $29.8 billion in 2019. The peaceful political situation, strong growth in the ICT and service sector will contribute to the rising economy of Nepal. The completion of hydroelectric projects in 2020 will boost the energy sector with potential export of electricity. The service sector is likely to remain strong with the increasing arrival of tourists. The completion of huge infrastructure projects such as the Gautam Buddha International Airport and highway projects will boost the infrastructure sector. Inflation is likely to rise to 6.5% in 2020 with the rise in government’s expenditure and a moderate rise in inflation in India. Nepal has made a notable improvement in the EoDB index in 2020, creating a favorable investment climate for investors.

Sri Lanka
Sri Lankan GDP growth for 2020 is expected to reach 3.53% from 2.72% in 2019. To boost the economy, the Sri Lankan government reduces VAT from 15% to 8%. The economy is transitioning from a predominantly rural-based economy towards a more urbanized economy and joined the upper-middle-income club, with average earnings being $4,060 in 2019. The aging population of Sri Lanka is expected to rise during the forecast period because of increasing life expectancy and declining mortality rate. With the geographical strategic location and preferential tax benefits, it is expected to attract investment in manufacturing and services such as tourism.

Pakistan
The Pakistani government has tightened the fiscal and monetary policies to address the economic disparity in the country. So, GDP growth remained weak and slowed from 5.53% in 2018 to 3.29% in 2019. However, with fiscal consolidation, reforms in fiscal management and competitiveness are implemented, and it is likely to increase by 2025. Inflation is expected to increase to 13% in 2020 as a result of exchange rate depreciation so, to control this inflationary pressure, the Pakistani Central Bank is increasing interest rate. The population of Pakistan is increasing and it is currently listed as the sixth most populous country in the world. With an increasing population and declining industrial product, the unemployment rate is expected to increase over the forecast period. Pakistan improved business confidence, improving the EoDB position. Coupled with the increasing infrastructural development projects, it is anticipated to attract large foreign investments in the country. Overall, the Pakistani economy is likely to improve with fiscal reforms, infrastructural development and expected increase in foreign direct investment (FDI).

The excel file presents economic, demographic, employment, infrastructure and competitiveness data for Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Srilanka. The file includes 2019 estimates and medium-term forecasts for 2020 to 2024, for select indicators.