South Asian economy grew by 4.7 percent in 2013: WB

KATHMANDU, June 12:

South Asian economies grew by 4.7 percent in 2013 compared to 5 percent of 2012, according to a report prepared by the World Bank Group.

The Global Economic Prospects (GEP) report, which the World Bank released on Wednesday, says developing countries are headed for a year of disappointing growth, as first quarter weakness in 2014 has delayed an expected pick-up economic activity.

“Developing countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation,” a statement issued by World Bank quoted president Jim Yong Kim as saying.

“In addition, the structural reform agenda in many developing countries, which has stalled in recent years, needs to be reinvigorated in order to sustain rapid income growth.”

South Asian economies have faced slow growth due to subdued manufacturing performance and sharp slowing of investment growth in India. Export from the South Asia increased due to currency depreciation during the second half of 2013, but it has started to slow down from the first quarter of 2014, according to the report.

“Inflation in the first quarter of 2014 was recorded above 7 percent in Nepal, Bangladesh, Pakistan and India, reflecting structural capacity constraints and persistence of food inflation,” the report stated.

However, capital flows to the region have grown steadily since mid-2013. Remittances continue to provide support to consumption and external balances in most countries of the region, according to the report.

The global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8 percent this year, strengthening to 3.4 and 3.5 percent in 2015 and 2016, respectively, the report said. According to the report, high-income economies will contribute about half of global growth in 2015 and 2016, compared with less than 40 percent in 2013.

The acceleration in high-income economies will be an important impetus for developing countries. High-income economies are projected to inject an additional $6.3 trillion to global demand over the next three years, which is significantly more than the $3.9 trillion increase they contributed during the past three years, and more than the expected contribution from developing countries.

National budgets of developing countries have deteriorated significantly since 2007. In almost half of developing countries, government deficits exceed 3 percent of GDP, while debt-to-GDP ratios have risen by more than 10 percentage points since 2007, according to the report.

    
Source: Republica