The World Bank (WB) predicts that the GDP in the South Asian region is projected to contract by 2.7% in 2020 as pandemic mitigation measures hinder consumption and services and uncertainty about the course of the pandemic chill private investment.
In its report ‘Global Economic Prospects’ World Bank predicts that Sri Lanka’s GDP to contract by 3.2% year. “In Sri Lanka, the combination of falling tourism, manufacturing activity and services associated with the pandemic, is envisaged to cause the output to contract by 3.2%, despite the earlier recovery from the April 2019 terrorist attacks,” the WB stated.
In India, growth is estimated to have slowed to 4.2% in FY 2019/20, which ended in March 2020. Output is projected to contract by 3.2% in FY 2020/21, when the impact of the pandemic will largely hit.
Pakistan (-2.6% in FY 2019/20) and Afghanistan (-5.5% in 2020) are both projected to experience contractions, as mitigation measures are anticipated to weigh heavily on private consumption.
Growth in Bangladesh (1.6% in FY 2019/20) and Nepal (1.8% in FY 2019/20) is expected to decelerate markedly in 2020 due to pandemic-related disruptions including mitigation measures and sharp falls in exports and remittance inflows. Nepal and Maldives will be hard hit by a drop in tourism.
Although the South Asia region has witnessed a smaller number of COVID-19 cases than many other regions, tourism activity has faded, and domestic pandemic mitigation measures are weighing heavily on short-term economic activity. Deteriorating economic conditions in advanced economies and major emerging market economies are impacting export-related industries. In addition, the incidence of COVID-19 cases is still rising rapidly regionally. Despite the relatively modest trade linkages the region has with advanced and major emerging economies, the sheer depth of the global contraction will weigh on economic activity.
According to World Bank forecasts, the global economy will shrink by 5.2% this year. That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870, the World Bank says in its June 2020 Global Economic Prospects.
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