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South Asia to grow faster than any other emerging market and developing economy region”

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The South Asian region is the fastest growing economic region from Asia, said Chief Economist, South Asia Region, World Bank Franziska Ohnsorge yesterday. She however said that it’s slower than what it was during the pre COVID era.

“At just under 6%, South Asia is expected to grow faster than any other emerging market and developing economy (EMDE) region in 2024–25.”

She predicted that this healthy trend should continue provided that there are no natural disasters to the region while presenting the ‘South Asia Economic Update’ report yesterday. She opined that the slowdown in China would not have a major negative impact on the region as China does not engage in ‘big’ businesses with the region. “Elections could add to spending pressures.”

She said that one of the biggest drawbacks in the region is the high energy cost. “It’s also noteworthy to state that the amount spent in the region to generate one unit of electricity is far higher than in most of the other countries outside the region. South Asia uses twice as much energy to produce each unit of output as the global average and the region lags in the adoption of advanced energy-efficient technologies.

Chief Economist, South Asia, World Bank, Franziska Ohnsorge at the launch of the ‘South Asia Economic Update’ report yesterday. Picture by Rukmal Gamage

Chief Economist, South Asia, World Bank, Franziska Ohnsorge at the launch of the ‘South Asia Economic Update’ report yesterday. Picture by Rukmal Gamage

She said that some of the alternative energy sources such as generators too result not only in environmental pollution but again leading to high electricity costs. She said the best way to overcome this is the region should shift towards producing more ‘Green’ Energy. She also said ‘easy access’ to credit too dampens to further economic progress of the region. Over the longer term, the policy priority of the region’s government should be to accelerate growth and job creation in a sustainable manner.

Government debt in South Asia averaged 86 % of GDP in 2022, above that of any other EMDE region. In some countries, outright defaults have short-circuited growth while, in others, increasing domestic borrowing by governments has driven up interest rates and diverted credit away from the private sector.

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