South Asia Economic Outlook
Our panelists project South Asia’s GDP growth in 2026 to again surpass all other world regions, led by a strong performance in India. Bangladesh, Pakistan and Sri Lanka are set to expand more softly than India owing to relatively high interest rates, political instability and fiscal consolidation. The key downside risk is a collapse in India-U.S. trade talks.
South Asia Inflation
In August, average South Asian inflation rose for the first time in 10 months to 2.7% (July: 2.4%) on an uptick in India, driven by a low base effect. In recent months, inflation has decelerated in all South Asian countries, most notably in Bangladesh and Pakistan. Looking ahead, lower commodity prices and stabilizing currencies should cap price pressures.
This chart displays Economic Growth (Real GDP, ann. var. %) for South Asia from 2025 to 2020.
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| GDP per Capita (USD) | 1,899 | 2,203 | 2,309 | 2,414 | 2,570 |
| International Reserves (USD bn) | 644 | 679 | 624 | 686 | 714 |
| Policy Interest Rate (%, eop) | 4.35 | 4.59 | 7.27 | 7.81 | 7.14 |
| Private Consumption (annual variation in %) | -4.2 | 10.9 | 7.3 | 4.8 | 6.9 |
| Investment (annual variation in %) | -5.9 | 15.1 | 7.9 | 5.9 | 6.3 |
| Current Account Balance (% of GDP) | 0.4 | -1.2 | -2.4 | -0.9 | -0.6 |
| Merchandise Trade Balance (USD bn) | -146 | -260 | -338 | -281 | -329 |
| Unemployment (% of active population, aop) | 5.9 | 5.7 | 5.3 | 6.1 | 6.1 |
| Public Debt (% of GDP) | 82.1 | 78.1 | 77.5 | 77.0 | 77.3 |
| External Debt (% of GDP) | 23.8 | 22.2 | 21.4 | 21.3 | 21.5 |
| Economic Growth (Real GDP, ann. var. %) | -4.3 | 8.9 | 7.2 | 7.9 | 6.0 |
| Merchandise Imports (USD bn) | 503 | 762 | 886 | 809 | 856 |
| Merchandise Exports (USD bn) | 357 | 502 | 548 | 528 | 527 |
| Industrial Production (ann. var. %) | -7.0 | 11.3 | 5.8 | 6.2 | 4.0 |
| Fiscal Balance (% of GDP) | -8.6 | -6.4 | -6.4 | -5.6 | -4.8 |
| Inflation (CPI, ann. var. %, aop) | 6.4 | 5.9 | 8.6 | 7.9 | 5.7 |