South Asia Economic Outlook
In 2027, South Asia’s GDP growth should slow a tad, slipping slightly behind the Middle East to be the world’s second-fastest growing region. Economic growth should slow a tad in India, while remaining broadly steady in Pakistan and Sri Lanka and speeding up in Bangladesh. A prolonged Iran war and El Niño-driven crop losses are downside risks.
South Asia Inflation
Inflation has risen this year as energy costs surged: In September, Pakistan’s inflation remained in double digits, Sri Lanka’s held at a three-year high and Bangladesh’s stayed above 8%, while India’s rose further above the RBI’s 4.0% target in August. Our panel sees regional inflation easing in 2027 as energy prices cool. El Niño-hit harvests are an upside risk.
This chart displays Economic Growth (Real GDP, ann. var. %) for South Asia from 2010 to 2026.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Fixed Investment (ann. var. %) | 15.1 | 7.9 | 6.1 | 7.2 | 7.7 |
| Inflation (CPI, ann. var. %, aop) | 5.9 | 8.6 | 7.9 | 5.7 | 2.8 |
| Private Consumption (ann. var. %) | 10.9 | 7.3 | 5.3 | 6.2 | 6.7 |
| Policy Interest Rate (%, eop) | 4.59 | 7.29 | 7.81 | 7.14 | 6.16 |
| Economic Growth (Real GDP, ann. var. %) | 8.9 | 7.2 | 6.4 | 6.5 | 7.0 |
| GDP per Capita (USD) | 2,203 | 2,265 | 2,347 | 2,570 | 2,571 |
| Merchandise Imports (USD bn) | 763 | 886 | 805 | 857 | 922 |
| External Debt (% of GDP) | 22.2 | 21.8 | 21.9 | 22.0 | 21.9 |
| Merchandise Exports (USD bn) | 502 | 548 | 529 | 529 | 531 |
| International Reserves (USD bn) | 679 | 624 | 686 | 714 | 753 |
| Industrial Production (ann. var. %) | 11.3 | 5.8 | 6.2 | 5.5 | 4.2 |
| Public Debt (% of GDP) | 79.8 | 79.1 | 80.1 | 79.7 | 79.5 |
| Merchandise Trade Balance (USD bn) | -260 | -338 | -276 | -328 | -391 |
| Unemployment (% of active population, aop) | 5.8 | 5.2 | 5.7 | 5.7 | 5.2 |
| Fiscal Balance (% of GDP) | -6.4 | -6.4 | -5.6 | -4.8 | -4.3 |
| Current Account Balance (% of GDP) | -1.2 | -2.4 | -0.9 | -0.6 | -0.5 |