Regional Outlook South Asia

South Asia: Fastest-growing region South Asia’s economic outlook remains steady and favourable. Regional GDP growth is expected to strengthen to 6.5% in 2018 and 7.0% in 2019, after posting an estimated 6.3% in 2017. Robust private consumption and sound macroeconomic policies. Monetary policies are moderately accommodative, while fiscal stances maintain a strong emphasis on infrastructure investment. Regional inflation expected to remain stable and at relatively low levels. The prospects for inflation, coupled with sustainable current account deficits, will facilitate macroeconomic policy management across the region. The positive economic outlook is widespread across the region, with most economies projected to see more robust growth rates in 2018 compared to 2017.

South Asia: Fastest-growing region This outlook is a continuation of the improving economic conditions that have been observed in South Asia since 2012, and will enable further – yet gradual and moderate- progress in labour markets indicators and in poverty rates. South Asia: GDP Growth and Consumer Price Inflation (Percentage) Source: UN/DESA. Note: Figures for 2017 are partly estimated; figures for 2018 and 2019 are forecasts.

South Asia: Economic activity is strengthening in most economies The outlook for India remains largely positive, underpinned by vigorous private consumption, robust public investment and structural reforms. Yet, the anemic performance of private investment remains a key macroeconomic concern. GDP growth in the Islamic Republic of Iran is expected to remain above 5.0% in 2018, but subject to significant geopolitical risks. South Asia: GDP growth, 2018 and 2012-2017 (average) (Percentage) Growth in Pakistan is expected to remain vigorous, but a rising current account deficit poses risks to baseline projections. The Bangladesh economy is projected to continue expanding at rapid pace, underpinned by strong domestic demand. Source: UN/DESA. Figures for 2018 are forecasts.

…but there are risks and challenges The region faces several downside risks, which can significantly alter the projected growth trajectory On the domestic front, the reform agenda could experience setbacks in some countries, while heightened geopolitical tensions might also restrain investment. On the external front, the monetary normalization process in the United States also pose risks to financial stability. The region needs to address structural issues to unleash its growth potential and to promote a more sustained and inclusive development path. Strengthening the fiscal accounts constitute a key challenge in most economies in order to strengthen the capacity to implement counter-cyclical policies. Tackling large infrastructure gaps should be a priority by promoting private investments (through public investments that crowd-in private investments, better implementation capacities in public sector and structural reforms).

Media contacts: Dan Shepard, T: +1 (212) 963-9495 | E: shepard@un.org Sharon Birch, T: +1 (212) 963-0564 | E: birchs@un.org http://www.un.org/en/development/desa/policy/wesp/