The outlook for the global economy in 2019 has darkened.
International trade and investment have softened. Trade tensions remain elevated. Several large emerging markets underwent substantial financial pressures last year.
Against this challenging backdrop, growth in emerging market and developing economies is expected to remain flat in 2019. The pickup in economies that rely heavily on commodity exports is likely to be much slower than hoped for. Growth in many other economies is anticipated to decelerate.
“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead. As economic and financial headwinds intensify for emerging and developing countries, the world’s progress in reducing extreme poverty could be jeopardized. To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies.”
South Asia is set to remain relatively insulated from some of these rising global uncertainties and will retain its top spot as the world’s fastest-growing region.
Bucking the global decelerating trend, growth in South Asia is expected to accelerate to 7.1 percent in 2019 from 6.9 percent in the year just ended, bolstered in part by stronger investments and robust consumption.
Among the region’s largest economies, India is forecast to grow at 7.5 percent in fiscal year 2019-20 while Bangladesh is expected to moderate to 7 percent in fiscal year 2018-19. Sri Lanka is seen speeding up slightly to 4 percent in 2019.
Notably, and despite increasing conflicts and growing fragility, Afghanistan is expected to increase its growth to 2.7 percent rate this year.
In this otherwise positive outlook, Pakistan’s growth is projected to slow to 3.7 percent in fiscal year 2018-19 as the country is tightening its financial conditions to help counter rising inflation and external vulnerabilities.
However, activity is projected to rebound and average 4.6 percent over the medium term.
South Asia’s overall robust economic prospects are proof that governments across the region are on the right path to achieving inclusive and sustainable growth.
And to reach that goal, the region is committed to getting its business environment in better shape to create more and better jobs for its people.
That was one of the main takeaways,Doing Business 2019, which shows how South Asia has made further gains to improve the ease of doing business and carried out a total of 19 business reforms in the past year–the second highest number ever.
Specifically, and in a first for South Asia, two of the region’s economies, India and Afghanistan, earned coveted spots as global top improvers.
This strong reform agenda reflects a political commitment across the region to lift barriers affecting businesses, especially local small and medium-sized enterprises, and unleash innovation and technological progress that drive growth.
Further tax revenue is consistently low across most South Asian countries and at rates below that of other developing countries with a similar income per capita.
In some countries has expanded their tax bases and curbed tax exemptions and fraud, but their revenue remains lower than government expenditures, creating large fiscal deficits that need to be financed through public borrowing