South Asia Economic Outlook
Our panelists still project South Asia’s GDP growth to lead the world league table in 2026, with India at the front. However, smaller regional economies will be more lethargic, with the Iran energy shock intensifying pre-existing headwinds like high interest rates and political instability. Downside risks include El Niño plus a drawn-out Iran energy shock.
South Asia Inflation
Inflation eased to a multi-year low last year, as oil and food costs dipped. However, in the year so far, regional inflation rates rose as energy costs jumped. Our panelists now forecast inflation to hit the prior decade’s average of 5.5% in 2026 because of the Iran war, and slim harvests owing 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 | |
|---|---|---|---|---|---|
| External Debt (% of GDP) | 20.9 | 20.6 | 20.7 | 20.8 | 20.8 |
| Industrial Production (ann. var. %) | 11.3 | 5.8 | 6.2 | 4.6 | 4.2 |
| Unemployment (% of active population, aop) | 5.9 | 5.2 | 5.1 | 5.2 | 5.2 |
| Public Debt (% of GDP) | 85.0 | 84.5 | 84.9 | 83.8 | 83.2 |
| 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 |
| 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 |
| 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 |