Booming South Asia Is Driving Economic Growth in Asia | Asian Development Bank

Booming South Asia Is Driving Economic Growth in Asia

Article | 27 April 2017

While overall economic growth in Asia is forecast to slow marginally this year, the dynamic economies of South Asia continue to post impressive numbers.

Economic growth in developing countries in Asia and the Pacific is expected to tick down a notch—from 5.8% in 2016 to 5.7% this year—due in part to slower growth in the People’s Republic of China, according to the Asian Development Outlook 2017 report.

But someone forgot to tell India, Bangladesh, Bhutan, and other parts of South Asia—where surging economic growth is now the norm for many countries. South Asia’s economy as a whole is expected to grow at 7% in 2017, increasing to 7.2% in 2018.

 

South Asian countries united in growth

In India, South Asia’s largest economy, GDP is expected to expand by 7.4% in 2017 and further to 7.6% the year after, based on increased consumer spending and government initiatives to boost private investment.

In Bangladesh, South Asia’s garment industry leader, exports are a key element driving growth that is forecast at 6.9% in 2017 and 2018. This is all the more impressive given sluggish growth in developed economies in Europe and elsewhere which Bangladesh relies upon as markets for its exports and as a source of remittances.  

In Bhutan, it’s all about clean energy. Bhutan is a world leader in terms of hydropower reserves. The country’s stunning 8.2% percent growth forecast in 2017 and 9.9% in 2018 rests primarily on the building of hydropower plants and selling the power they generate to energy-hungry India and other neighbors.

Nepal, which is still reeling from one of the worst disasters in its history—a 7.8 magnitude earthquake that killed nearly 9,000 people, injured more than 22,000, and destroyed or damaged nearly 800,000 homes—is on the path to economic recovery. It is forecast to post 5.6% growth in 2017 and 5.4% in 2018, powered by reconstruction spending and a revived agriculture sector.

In Pakistan, major economic reforms are working in tandem with an improved security situation to push growth to an estimated 5.2% in 2017 and 5.5% in 2018—the highest rates the country has seen in recent years. Economic reforms are also a big part of the story in Sri Lanka, which is expected to see 5% growth in 2017 and 2018.

South Asia's smaller economies

In South Asia’s smaller economies—Maldives and Afghanistan—modest growth was maintained despite significant challenges. With tourism weak for a third straight year, Maldives is nevertheless forecast to register 3.8% growth in 2017 and 4.1% for 2018. In Afghanistan, agriculture is expected to help spur 2.5% growth in 2017 and 3% in 2018. This will build on a gradual upward trend in growth over recent years.

Despite the slight fall in developing Asia’s growth forecast overall, the region’s performance remains steady and it still delivers more than 60% of global economic growth, according to the Asian Development Outlook 2017. In 30 of the 45 economies in developing Asia, growth is increasing.