World Bank says South Asian countries' economy overcoming from pandemic, but recovery fragile
KATHMANDU, MARCH 31
As per the World Bank's latest report, the economies of South Asian countries, which were hit by the pandemic in 2020, are in a state of rebounding.
The report published by the WB on Wednesday stated that economic growth is set to increase by 7.2 percent in 2021 and 4.4 percent in 2022 in the South Asian region.
The economies of these countries saw a historic low in 2020, a scenario that is gradually changing as countries are on the path to economic recovery, for which the key is said to be fast and equitable vaccination and investing in preventive healthcare
The World Bank, however, shares in its twice-a-year-regional update that, growth is uneven and economic activity well below pre-COVID-19 estimates, as many businesses need to make up for lost revenue and millions of workers -- most of them in the informal sector -- are still reeling from job losses, falling incomes, worsening inequalities, and human capital deficits.
The report references the latest 'South Asia Economic Focus, Spring 2021: South Asia Vaccinates' which shows that the region is set to regain its historical growth rate by 2022. The recovering economic activity is indicated by the consumption of electricity and mobility data.
India is expected to grow more than 10 percent in the fiscal year 2021-22, which is a substantial upward revision of 4.7 percentage points from January 2021 forecasts, the report highlights.
Meanwhile, the outlook for Bangladesh, Nepal, and Pakistan has also been revised upward, supported by good enough remittance inflows. Among these countries, it is estimated that Bangladesh's gross domestic product (GDP) iwould increase by 3.6 percent in 2021.
Nepal's GDP is projected to grow by 2.7 percent in the fiscal year 2021-22 and recover to 5.1 percent by 2023. Likewise, Pakistan's growth is expected to reach 1.3 percent in 2021, slightly above previous projections.
The improved economic outlook, it is said, reflects countries' efforts to keep their COVID-19 caseload under control and roll out vaccine campaigns, and the governments' decisions to transition from widespread lockdowns to more targeted interventions, accommodating monetary policies and fiscal stimuli-through targeted cash transfers and employment compensation programs-have also propped up recovery.
"We are encouraged to see clear signs of an economic rebound in South Asia, but the pandemic is not yet under control and the recovery remains fragile, calling for vigilance," said Hartwig Schafer, World Bank Vice President for the South Asia Region. "Going forward, South Asian countries need to ramp up their vaccination programs and invest their scarce resources wisely to set a foundation for a more inclusive and resilient future."
Furthermore, World Bank Chief Economist for the South Asia Region, Hans Timmer said, "The health and economic benefits from vaccinations greatly exceed the costs involved in purchasing and distributing vaccines for all South Asian countries."
He adds, "South Asia has stepped up to vaccinate its people, but its healthcare capacity is limited as the region only spends two per cent of its GDP on healthcare, lagging any other region. The main challenge ahead is to reprioritise limited resources and mobilise more revenue to reach the entire population and achieve full recovery."
South Asia, which grapples with high stunting rates among children and accounts for more than half of the world's student dropouts due to COVID-19, needs to ramp up investments in human capital to help new generations grow up healthy and become productive workers. Noting that South Asia's public spending on healthcare is the lowest in the world, the report also suggests that countries further invest in preventive care, finance health research, and scale up their health infrastructure, including for mass and quick production of vaccines.