Commentary. South Asia Economy Has Promise, Is Complex
By Farwa Aamer, Asia Society Policy Institute’s Director of South Asia Initiatives
WASHINGTON, DC – As per the latest World Bank report, South Asia’s economic outlook is marked by both promise and complexity. While the region is poised to achieve a commendable growth rate of 5.8% this year, surpassing many other developing regions, it faces a range of multifaceted challenges and opportunities beyond those outlined in the provided information.
India, as a major player in the region, has ambitious economic goals. With Prime Minister Narendra Modi‘s vision of a $5 trillion economy, India is actively pursuing structural reforms, including efforts to ease regulations and promote manufacturing under the ‘Make in India’ initiative. Additionally, India’s role in the newly formed India-Middle East-Europe-Corridor may pave the way for more economic growth and development opportunities.
Pakistan, on the other hand, while struggling to stabilize its economy still continues to be a relevant player in regional economic development, particularly through the China-Pakistan Economic Corridor (CPEC). The second phase of CPEC focuses on industrialization, agriculture, and socioeconomic development. This initiative has the potential to not only improve Pakistan’s infrastructure but also strengthen trade ties with China and other countries in the region. However, addressing the security and political challenges associated with CPEC remains essential to its successful implementation and eventual contribution to national and regional growth.
To sustain and enhance economic growth across South Asia, structural reforms are imperative, encompassing efforts to streamline bureaucracy, manage inflationary pressures, improve the business environment, and foster entrepreneurship tailored to each country’s unique circumstances. Furthermore, South Asia has yet to fully leverage the potential of regional cooperation and trade integration, demanding a focus on reducing trade barriers and enhancing economic collaboration. Embracing digital transformation and innovation, along with investments in technology infrastructure and human capital development, can drive growth in sectors such as technology, services, and healthcare.
Additionally, policymakers must emphasize sustainable development, environmental protection, and inclusive growth. The region’s diverse environmental challenges require concerted efforts to mitigate air pollution, conserve natural resources, and transition to renewable energy sources. These measures not only contribute to long-term environmental sustainability but also mitigate economic risks associated with climate change and water insecurity.
Furthermore, addressing income inequality and ensuring that the benefits of economic growth are equitably distributed are essential for achieving long-term stability and social cohesion. This includes targeted policies aimed at vulnerable populations and marginalized communities.
Upcoming elections in countries like India, Pakistan, and Bangladesh offer a window of opportunity to prioritize and implement these critical policy objectives. This comprehensive approach, coupled with India’s ambitious economic goals and regional initiatives like IMEEC and Pakistan’s second phase of CPEC, is pivotal for South Asia to realize its full economic potential and build a resilient, inclusive, and sustainable future in a rapidly evolving global landscape.