http://www.worldbank.org/globaloutlook South Asia’s regional GDP growth slipped to 4.8 percent in 2012, following a robust recovery in the years after the 2008 global financial crisis. A weakening global economy, coupled with domestic difficulties (including policy uncertainties, structural capacity constraints, and a poor harvest) contributed to weaker regional growth in 2012.

1. 1
Sanket Mohapatra
World Bank
June 2013
Global
Economic
Prospects
South Asia
Regional Outlook
http://www.worldbank.org/globaloutlook

2. A sharp slowdown in post-financial crisis GDP
growth in South Asia, led by India
0
1
2
3
4
5
6
7
8
9
10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
South AsiaGDP growth, %

3. A sharp slowdown in post-financial crisis GDP
growth in South Asia, led by India
0
1
2
3
4
5
6
7
8
9
10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
South AsiaGDP growth, %

4. A sharp slowdown in post-financial crisis GDP
growth in South Asia, led by India
0
1
2
3
4
5
6
7
8
9
10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
South AsiaGDP growth, %

5. A sharp slowdown in post-financial crisis GDP
growth in South Asia, led by India
0
1
2
3
4
5
6
7
8
9
10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
South Asia
Bangladesh
India
GDP growth, %

6. A sharp slowdown in post-financial crisis GDP
growth in South Asia, led by India
0
1
2
3
4
5
6
7
8
9
10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
South Asia India
Pakistan Nepal
GDP growth, %

7. A sharp slowdown in post-financial crisis GDP
growth in South Asia, led by India
0
1
2
3
4
5
6
7
8
9
10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
South Asia India
Pakistan Nepal
Sri Lanka
GDP growth, %

8. A sharp slowdown in post-financial crisis GDP
growth in South Asia, led by India
0
1
2
3
4
5
6
7
8
9
10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
South Asia Bangladesh
India Pakistan
Nepal Sri Lanka
GDP growth, %

9. Trade deficits widened in India,
Pakistan and Sri Lanka
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2005 2006 2007 2008 2009 2010 2011 2012
India
Pakistan
Bangladesh
Sri Lanka
Trade balance/GDP, %

10. Trade deficits widened in India,
Pakistan and Sri Lanka
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2005 2006 2007 2008 2009 2010 2011 2012
India
Pakistan
Bangladesh
Sri Lanka
Trade balance/GDP, %
-30
-20
-10
0
10
20
30
India Pakistan Bangladesh Sri Lanka Nepal
Remittances
Current account balance
Percent of GDP
Migrant remittances supported
current account positions in
Nepal, Bangladesh, and Pakistan

11. Trade deficits widened in India,
Pakistan and Sri Lanka
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2005 2006 2007 2008 2009 2010 2011 2012
India
Pakistan
Bangladesh
Sri Lanka
Trade balance/GDP, %
-30
-20
-10
0
10
20
30
India Pakistan Bangladesh Sri Lanka Nepal
Trade balance
Remittances
Current account balance
Percent of GDP
Migrant remittances supported
current account positions in
Nepal, Bangladesh, and Pakistan

12. Gross capital flows rebounded in the second half
of 2012 and Q1 2013, but moderated in Q2
0.0
1.0
2.0
3.0
4.0
5.0
Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13
New equity issuance
Bond issuance
Bank Loans
Gross international capital flows to South Asia, billions USD

13. Gross capital flows rebounded in the second half
of 2012 and Q1 2013, but moderated in Q2
0.0
1.0
2.0
3.0
4.0
5.0
Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13
New equity issuance
Bond issuance
Bank Loans
Gross international capital flows to South Asia, billions USD

14. Gross capital flows rebounded in the second half
of 2012 and Q1 2013, but moderated in Q2
0.0
1.0
2.0
3.0
4.0
5.0
Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13
New equity issuance
Bond issuance
Bank Loans
Gross international capital flows to South Asia, billions USD

15. Outlook: An acceleration in GDP growth in
2013-15
2011 2012e 2013f 2014f 2015f
Fiscal year basis
Bangladesh 6.7 6.2 5.8 6.1 6.3
India 6.2 5.0
Nepal 3.4 4.9
Pakistan 3.0 3.7
Calendar year basis
Afghanistan 7.0 11.8
Sri Lanka 8.2 6.4
e = estimate; f = forecast
Source: World Bank

16. Outlook: An acceleration in GDP growth in
2013-15
2011 2012e 2013f 2014f 2015f
Fiscal year basis
Bangladesh 6.7 6.2 5.8 6.1 6.3
India 6.2 5.0 5.7 6.5 6.7
Nepal 3.4 4.9
Pakistan 3.0 3.7
Calendar year basis
Afghanistan 7.0 11.8
Sri Lanka 8.2 6.4
e = estimate; f = forecast
Source: World Bank

17. Outlook: An acceleration in GDP growth in
2013-15
2011 2012e 2013f 2014f 2015f
Fiscal year basis
Bangladesh 6.7 6.2 5.8 6.1 6.3
India 6.2 5.0 5.7 6.5 6.7
Nepal 3.4 4.9 3.7 3.8 4.1
Pakistan 3.0 3.7
Calendar year basis
Afghanistan 7.0 11.8
Sri Lanka 8.2 6.4
e = estimate; f = forecast
Source: World Bank

18. Outlook: An acceleration in GDP growth in
2013-15
2011 2012e 2013f 2014f 2015f
Fiscal year basis
Bangladesh 6.7 6.2 5.8 6.1 6.3
India 6.2 5.0 5.7 6.5 6.7
Nepal 3.4 4.9 3.7 3.8 4.1
Pakistan 3.0 3.7 3.4 3.5 3.7
Calendar year basis
Afghanistan 7.0 11.8
Sri Lanka 8.2 6.4
e = estimate; f = forecast
Source: World Bank

19. Outlook: An acceleration in GDP growth in
2013-15
2011 2012e 2013f 2014f 2015f
Fiscal year basis
Bangladesh 6.7 6.2 5.8 6.1 6.3
India 6.2 5.0 5.7 6.5 6.7
Nepal 3.4 4.9 3.7 3.8 4.1
Pakistan 3.0 3.7 3.4 3.5 3.7
Calendar year basis
Afghanistan 7.0 11.8 3.1 4.9 6.3
Sri Lanka 8.2 6.4
e = estimate; f = forecast
Source: World Bank

20. Outlook: An acceleration in GDP growth in
2013-15
2011 2012e 2013f 2014f 2015f
Fiscal year basis
Bangladesh 6.7 6.2 5.8 6.1 6.3
India 6.2 5.0 5.7 6.5 6.7
Nepal 3.4 4.9 3.7 3.8 4.1
Pakistan 3.0 3.7 3.4 3.5 3.7
Calendar year basis
Afghanistan 7.0 11.8 3.1 4.9 6.3
Sri Lanka 8.2 6.4 6.5 6.7 6.5
e = estimate; f = forecast
Source: World Bank

21. Risks to the Outlook
• Success with which planned and announced reform
policies are actually implemented over 2013-15. Weak
business sentiment may adversely affect revival of
investment and growth.
• India’s large current account deficit and vulnerability to a
slowing or reversal of foreign capital inflows
• Weaker than expected monsoon rains
• Domestic challenges
21

22. Risks to the Outlook
• Success with which planned and announced reform
policies are actually implemented over 2013-15. Weak
business sentiment may adversely affect revival of
investment and growth.
• India’s large current account deficit and vulnerability to a
slowing or reversal of foreign capital inflows
• Weaker than expected monsoon rains
• Domestic challenges
– Focus on alleviating domestic supply-side structural constraints
(particularly provision of energy inputs for firms) and continue
rebuilding of fiscal buffers
– Sustained strong growth will depend on productivity enhancements,
such as improving the overall business climate, labor market
reforms, and investing in infrastructure, education and health. 22

23. 23
Sanket Mohapatra
World Bank
June 2013
Global
Economic
Prospects
South Asia
Regional Outlook
http://www.worldbank.org/globaloutlook