South Asia Economic Outlook
Our panel still forecasts South Asia’s aggregate GDP growth to remain the world’s sharpest this year, led by India. That said, smaller Asian economies will expand at a slower pace, with the Iran war compounding pre-existing headwinds such as relatively tight monetary policy, government austerity and political instability.
South Asia Inflation
Inflation eased to a multi-year low in 2025 thanks to lower oil and food costs. However, in January–March 2026, South Asian inflation trended up as a result of lower interest rates and the recent spike in energy costs. For now, our panelists expect inflation to remain below the 10-year trend in 2026, though a prolonged Iran war could change this.
This chart displays Economic Growth (Real GDP, ann. var. %) for South Asia from 2010 to 2025.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| External Debt (% of GDP) | 22.2 | 21.8 | 21.3 | 21.3 | 21.4 |
| Private Consumption (ann. var. %) | 10.9 | 7.3 | 5.0 | 6.9 | 7.2 |
| Fixed Investment (ann. var. %) | 15.1 | 7.9 | 4.7 | 6.3 | 7.0 |
| Unemployment (% of active population, aop) | 5.9 | 5.2 | 5.1 | 5.2 | 5.2 |
| International Reserves (USD bn) | 679 | 624 | 686 | 714 | 753 |
| Economic Growth (Real GDP, ann. var. %) | 8.9 | 7.2 | 7.9 | 6.0 | 6.7 |
| Industrial Production (ann. var. %) | 11.3 | 5.8 | 6.2 | 4.0 | 4.1 |
| Current Account Balance (% of GDP) | -1.2 | -2.4 | -0.9 | -0.6 | -0.7 |
| Public Debt (% of GDP) | 79.9 | 79.2 | 80.3 | 79.6 | 79.5 |
| Merchandise Exports (USD bn) | 502 | 548 | 529 | 529 | 532 |
| GDP per Capita (USD) | 2,202 | 2,260 | 2,341 | 2,570 | 2,627 |
| Merchandise Imports (USD bn) | 763 | 886 | 805 | 856 | 920 |
| Merchandise Trade Balance (USD bn) | -260 | -338 | -276 | -328 | -388 |
| Inflation (CPI, ann. var. %, aop) | 5.9 | 8.6 | 7.9 | 5.7 | 2.7 |
| Fiscal Balance (% of GDP) | -6.4 | -6.4 | -5.6 | -4.8 | -4.4 |
| Policy Interest Rate (%, eop) | 4.59 | 7.27 | 7.81 | 7.14 | 6.13 |