South Asia has little scope for economic stimulus after fuel subsidies: World Bank

TOKYO, November 12, 2008 (AFP) – South Asian economies, still reeling from food and energy crises, have little scope to boost their economies in the face of the global financial turmoil, a World Bank official said Wednesday.

But growth will rebound by 2010 to 7.2 percent, supported by economic giants such as India, whose “fundamentals are strong,” Guerrero said. The region also includes Sri Lanka, Bangladesh, Afghanistan, Bhutan, Nepal and the Maldives.

Guerrero was speaking ahead of a Group of 20 summit this weekend where authorities and financial bodies including the World Bank will discuss ways to respond to the current crisis.

But “we won’t have all the answers (to the crisis) coming out of the G20 meeting,’ she warned.

South Asia is “not in a strong position to carry out counter-cyclical policies, which is what the rest of the world is trying to do,” said the Bank’s South Asia vice president, Isabel Guerrero.

The region is unlikely to see stimulus packages like the one unveiled by China on Sunday that is worth more than half a trillion dollars, she said.

“South Asia does not have the same resources to respond to the shock,” she told reporters on a visit to Tokyo.

South Asian countries