KATHMANDU: South Asia has regained its lead as the fastest growing region in the world, supported by recovery in India. With the right mix of policies and reforms, growth is expected to accelerate to 6.9 percent in 2018 and 7.1 percent next year, reads a press statement issued by The World Bank.

According to the statement, which was issued on April 15 in Washington, World Bank's bi-annual report 'South Asia Economic Focus' (SAEF) found that the region could even extend its lead over East Asia and the Pacific. Much of the progress, however, was driven by India’s growth rebound and was not consistent across countries. Despite accelerating global growth and trade, exports remained weak. Progress on fiscal consolidation was slow, and deficits high.

The spring 2018 edition of SAEF 'Jobless Growth?' argued that growth alone would not be enough to attain the higher employment rates enjoyed by other developing countries, especially among women.

“More than 1.8 million young people will reach working age every month in South Asia through 2025 and the good news is that economic growth is creating jobs in the region,” said Martin Rama, World Bank South Asia Region Chief Economist. “But providing opportunities to these young entrants while attracting more women into the labour market, will require generating even more jobs for every point of economic growth.” 

The statement further reads, while the number of working age people was increasing, the fraction of working-age people who are at work had declined in most countries in South Asia based on employment data analysed from 2005 to 2015. Some decline was to be expected, as higher incomes allow households to prioritise education, health and other commitments.

However, the fall in employment rates in South Asia had been much faster than in East Asia. And it had particularly been strong in India, Bhutan and Sri Lanka, especially for women, the report showed. With declining employment rates, the region was foregoing some of its potential demographic dividend.

To arrest further declines in employment rates, South Asian countries would need to create 11.7 million jobs a year, which was feasible if the current growth momentum of the region would sustain, states the document. But if South Asia wanted to increase employment rates to the levels seen in other regions with similar income levels, it would need to create many more jobs. The focus should also be on better jobs, as regular wage employment remained the exception more than the norm.

“Growth is important, but even very high growth will alone not be enough to increase South Asia’s employment rate,” said report author Robert Beyer. “Policies and actions are needed to make growth more labour-intensive, and especially to create the kinds of jobs that can encourage greater labour force participation by women.”

Country Outlook: Growth is relatively stable in most countries

Real GDP growth in South Asia

2015

2016

2017 (est)

2018 (f)

2019 (f)

2020 (f)

Afghanistan (CY)

1.3

2.4

2.6

2.2

2.5

3.3

Bangladesh (FY)

6.6

7.1

7.3

6.5

6.7

7.0

Bhutan (FY)

7.3

7.4

5.8

5.4

6.0

8.7

India (FY)

8.2

7.1

6.7

7.3

7.5

7.5

Maldives (CY)

2.2

6.2

6.2

5.5

4.5

4.9

Nepal (FY)

3.3

0.4

7.5

4.6

4.5

4.2

Pakistan (FY, factor prices)

4.1

4.6

5.4

5.8

5.0

5.4

Sri Lanka (CY)

5.0

4.5

3.1

4.8

4.5

4.5

CY: Calendar Year, FY: Fiscal Year, est: Estimate f: Forecast

The press release reveals that Nepal had seen an economic recovery after disruptions from earthquakes and a trade blockade, however, growth is expected to slow from 7.5 percent in fiscal year 2017 to 4.6 percent in 2018 due to the heaviest floods in decades combined with slow recovery of exports, slowdown in remittances, and an increase in lending rates. Every month, the working age population increased by 35,000 people and Nepal must create 240,000 jobs a year to maintain its employment rate.