Building on South Asia's Economic Success

IMF News, November 4, 2019

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Publication date: November 4, 2019.
South Asia is described as poised to play a key role in the global economy, building on steady economic progress and reform over the last few decades.
India remains among the fastest-growing large economies despite the recent global economic slowdown.
South Asia’s contribution to global growth is set to increase while those of more mature economies around the world decelerate.
The region has a population with a median age under 27, making it the youngest region in Asia.

More than 150 million people in the region are expected to enter the labor market by 2030.
A large and young workforce can be South Asia’s strength if supported by a high-quality and job-rich growth strategy that leverages all sectors of the economy in a balanced way.

Under a scenario with more ambitious liberalization of trade and foreign direct investment, stepped-up efforts to improve infrastructure, and successful harnessing of South Asia’s workforce:
- The region could account for about one-third of global growth by 2040.
- This is 5 percentage points higher than the expected contribution under a baseline scenario based on current, ongoing policies and demographic trends.
- Real GDP growth in South Asia would surpass 6.5 percent, on average, over the long-term.
Under the baseline scenario:
- Real GDP growth would be about 6 percent.
Under a downside scenario where job-rich growth fails to be delivered to the growing workforce:
- Real GDP growth would be just 5 percent.

For India alone, under the more ambitious-reforms scenario:
- Real GDP could be boosted by 20 percent by 2040.
- Per capita income could reach about 50 percent of that in the United States by 2040.
Important spillovers to the region are expected through trade linkages and productivity gains from technology transfers.

Building on South Asia's Economic Success — November 4, 2019