Although improved trade terms and reduced trade deficits offer some relief, growth momentum in the region is slowing. India, accounting for 75 per cent of the region's output, has shown subpar growth in early 2023 compared to pre-pandemic figures, according to the latest Global Economic Prospects report by the World Bank.

Bangladesh faces difficulties in industrial production and the services sector due to sustained import restrictions and energy shortages. Additionally, the impacts of severe domestic crises like the 2022 floods in Pakistan, continue to hinder growth in Afghanistan, Pakistan, and Sri Lanka. Afghanistan is also grappling with widespread poverty due to insufficient income.

Projected regional growth is expected to slow to 5.9 per cent in 2023 and 5.1 per cent in 2024. Despite challenges, the strength of private consumption and investment, especially within India's thriving services sector, is projected to bolster economic growth in 2023.

India is bracing for a further slowdown in growth to 6.3 per cent in fiscal (FY) 2023-2024 (April-March) due to high inflation and rising borrowing costs. In Bangladesh, increased inflation, policy uncertainty, and weak external demand are expected to slow growth, while Pakistan's growth has been constrained to 0.4 per cent in FY2022-2023 (July-June) due to multiple issues including the lasting effects of the 2022 floods.

Sri Lanka expects a 4.3 per cent contraction in 2023 output, with slow recovery beginning in 2024. In Afghanistan, the economic outlook has stabilised due to resumed aid flows, with positive growth expected in the coming years.

However, risks to the region's economic outlook remain primarily negative, with the possibility of financial crises exacerbated by high government and external debt, low foreign exchange reserves, and socio-economic tensions. The region is also highly vulnerable to climate change, with over half of South Asians affected by climate-related disasters in the past two decades, emphasising the urgent need for increased resilience.

Fibre2Fashion News Desk (NB)