South Asia Economic Outlook
Our panel still sees South Asia’s aggregate GDP growth as the globe’s speediest this year, led by India. However, smaller regional economies will be weaker, with the Iran energy shock compounding pre-existing headwinds like tight monetary policy and political instability. The El Niño weather pattern plus a prolonged Iran energy shock are downside risks.
South Asia Inflation
Inflation eased to a multi-year low in 2025, as oil and food costs fell. That said, in January–May 2026, regional inflation rates rose as energy costs jumped. Our Consensus is still for inflation to stay below the prior decade’s average of 5.5% in 2026, but our panel has begun to hike its forecasts on the Iran war, and poor harvests due to El Niño are an upside risk.
This chart displays Economic Growth (Real GDP, ann. var. %) for South Asia from 2010 to 2025.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Industrial Production (ann. var. %) | 11.3 | 5.8 | 6.2 | 5.5 | 4.2 |
| External Debt (% of GDP) | 22.2 | 21.8 | 21.3 | 21.3 | 22.0 |
| Merchandise Imports (USD bn) | 763 | 886 | 805 | 857 | 922 |
| Current Account Balance (% of GDP) | -1.2 | -2.4 | -0.9 | -0.6 | -0.4 |
| Private Consumption (ann. var. %) | 10.9 | 7.3 | 5.0 | 6.9 | 7.1 |
| GDP per Capita (USD) | 2,202 | 2,260 | 2,341 | 2,570 | 2,576 |
| Economic Growth (Real GDP, ann. var. %) | 8.9 | 7.2 | 7.9 | 6.0 | 6.9 |
| Fiscal Balance (% of GDP) | -6.4 | -6.4 | -5.6 | -4.8 | -4.3 |
| Public Debt (% of GDP) | 79.9 | 79.2 | 80.3 | 79.6 | 79.4 |
| Policy Interest Rate (%, eop) | 4.59 | 7.27 | 7.81 | 7.14 | 6.15 |
| Fixed Investment (ann. var. %) | 15.1 | 7.9 | 4.7 | 6.3 | 7.8 |
| Merchandise Trade Balance (USD bn) | -260 | -338 | -276 | -328 | -390 |
| Unemployment (% of active population, aop) | 5.9 | 5.2 | 5.1 | 5.2 | 5.2 |
| International Reserves (USD bn) | 679 | 624 | 686 | 714 | 753 |
| Merchandise Exports (USD bn) | 502 | 548 | 529 | 529 | 532 |
| Inflation (CPI, ann. var. %, aop) | 5.9 | 8.6 | 7.9 | 5.7 | 2.7 |