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Global Economic Prospects

South Asia

  Author: The World Bank
 January, 2014
  Price: 0.00

Abstract:

South Asia’s GDP growth rose to an estimated 4.6 percent in 2013 from 4.2 percent in 2012 on a market price-calendar year basis. Growth was, however, well below its pre-crisis pace, reflecting a combination of domestic imbalances, weakening investment rates, and a challenging external environment. A cyclical recovery in the second half of 2013 was led by a rapid expansion of regional exports, reflecting a gradual recovery in global demand and currency depreciation in India. India was hit particularly hard by a withdrawal of portfolio capital (resulting in steep depreciation of the rupee) in mid-year, stemming from apprehensions of tapering of U.S. quantitative easing. Although retail inflation remained high in some countries, normal harvests and lower international commodity prices helped stabilize consumption growth in South Asia. Sri Lanka experienced a significant decline in inflation during the course of 2013. In India, however, despite a negative output gap, consumer price inflation remained elevated at close to 10 percent (y/y) for much of the year. Pakistan also faced inflationary pressures, while inflation picked up towards end of the year in Bangladesh. The growth of remittances to South Asia moderated to an estimated 6.8 percent in 2013 from 9.7 percent in 2012. While India was the largest recipient by size, relative to GDP remittances were more important resource flows for Bangladesh, Nepal, Pakistan, and Sri Lanka in 2013.

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