The World Bank’s South Asia Development Report for April 2024 underlines that output growth in South Asia has exceeded expectations and remains stronger compared to other emerging market and developing economies (EMDEs).
This is largely attributed to the impressive economic expansion of India. The growth in South Asia continues to outpace that of other EMDEs, primarily due to India’s robust economic expansion.
Led by India’s vibrant economic breakthrough, South Asia has been performing better on various macroeconomic fundamentals. Inflation and the balance of payment pressures have eased significantly. Supply chains have shown great resilience to the logistic challenges posed by the Red Sea conflict and the Panama Canal drought.
Furthermore, several South Asian governments have been actively streamlining their macroeconomic policies and capital controls, while simultaneously undertaking economic adjustment and reform initiatives in conjunction with the International Monetary Fund (IMF).
The output growth in South Asia is projected to be around 6.0–6.1 percent for 2024–25, driven by India’s sustained growth. India’s GDP is projected at 7.5 percent in FY 2023-24,supported by a rapid increase in investments and Government consumption. Inflation remained within the Central banks’ target range of 2–6 percent and is expected to subside in the coming quarters.
India’s composite purchasing managers index (PMI) stood at 60.6, well above the global average of 52.1. A higher-than-global average composite purchasing manager’s index (PMI) shows robust growth in the manufacturing and services sectors. The growth in services sector is spearhead by strong growth in construction and real estate activity in the country.
In India, financial conditions have remained accommodative. Domestic credit issuance to the commercial sector (including public and private borrowers) grew by 14 percent (year-on-year) in December 2023, the fastest pace since 2013. (TOO)
