Brightest star in South Asia: India to grow at 7.6%, says United Nations; Pakistan to slip

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Published: January 24, 2019 6:29:27 PM

India’s economy is expected to expand by 7.6% in 2019 vis-a-vis a 7.4% growth in 2018 on the back of consumption, reforms and fiscal policies, even as neighbouring Pakistan slips in growth on account of the balance of payments problem, said a United Nations report.

India to grow at 7.2 pc in 2018-19: CSO estimatesIndia presents a favourable front with respect to other developing countries in the South Asian region.

India’s economy is expected to expand by 7.6% in 2019 vis-a-vis a 7.4% growth in 2018 on the back of consumption, reforms and fiscal policies, even as neighbouring Pakistan slips in growth on account of the balance of payments problem, said a United Nations report.

India presents a favourable front with respect to other developing countries in the South Asian region, the UN World Economic Situation and Prospects (WESP) 2019 said the report. The positive growth is underpinned by robust private consumption, expansionary fiscal stance and previous economic reforms, the report said.

Besides India, economies of Bhutan and Bangladesh are also largely positively placed, with the latter expected to continue its growth at above 7%. In contrast, Iran and Pakistan will struggle to clock significant growth numbers. Iran, which is reeling under recession in the wake of US imposed sanctions and domestic turmoil will slump further in 2019.

Pakistan, on the other hand, will grow slow at less than 4%, after registering an estimated expansion of 5.4% in 2018. The chief reason for this slowdown is its balance of payment difficulties and pressures of the domestic currency, said the report.

Sri Lanka, which is gradually recovering from an economic retreat in 2017 is expected to grow, although the growth is projected to be below potential. The reasons primarily are political turbulences, limp investment demand and weak business sentiment, said the report.

Overall, the regional GDP is expected to expand by 5.4% in 2019 and 5.9% in 2020. However, the report points out certain risks factors — external and internal — which might possibly hamper the growth in the region.

Internal factors like political uncertainty, slow implementation of reforms, security problems and infrastructure bottlenecks are the major challenges cited by the report. While the external issues it mentions are the escalation of trade disputes and tightened global financial conditions.

To encourage inclusive sustained growth figures the report suggests that the region needs to improve labour market conditions. Citing India, the report says that job creation in the formal sector has been dismal where workers are left underemployed with low paying jobs despite qualifications.

Outside of South Asia, the growth in the US will likely decelerate to 2.5% in 2019. Whereas, China, feeling the negative impacts of trade tensions, will likely slump from 6.6% in 2018 to 6.3% in 2019, said the report.

 

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