South Asia, fastest growing region; will grow at 7-pct in 2015: World Bank

Apr 17, 2015 (LBO) – South Asia is expected to grow at 7 percent in 2015, picking up pace to 7.6 percent by 2017 as more productive capital is brought on stream, a World Bank report said.

“South Asia is set to become the fastest growing region with the region expected to grow at 7 percent in 2015, picking up pace to 7.6 percent by 2017 as more productive capital is brought on stream,” World Bank’s South Asia Economic Focus report said.

The report says a key factor for South Asia’s success going forward will be the ability of its policy makers to seize the decline in global oil prices to address the inefficiencies and the fiscal burden from the inadequate pricing of energy in the region.

“South Asia is a major beneficiary of the recent fall in international oil prices, as all countries in it are net oil importers.

“Cheaper imports should boost their trade and current account balances. But also fiscal balances should see relief, as fuel subsidies have been significant expenditure items across South Asian budgets,”

“From a microeconomic perspective, oil-intensive sectors such as energy or transport should see lower costs translate into lower market prices, in turn putting significant downward pressure on consumer price inflation,”

Ultimately, from a social welfare perspective, consumers and households should experience positive income effects – both directly through lower consumer prices and indirectly through faster economic growth, the report said.