South Asia expected to be world’s fastest-growing region in 2016-17, says United Nations
‘Contrary to global trends, South Asia, led by India’s economy, is on an upward trajectory supported by growing domestic demand and bolstered by declining oil prices and robust macroeconomics fundamentals’ stated Dr. Nagesh Kumar, Head, ESCAP South and South-West Asia Office, during the Roundtable discussion on the World Economic Situation and Prospects (WESP) 2016 Report held on 22 January 2016 in New Delhi.
Introducing the Report to the press, Dr. Kumar added: ‘Average GDP growth in the subregion is forecast at 6.7% in 2016 and 7% in 2017, up from 6% in 2015’.
According to the Report, South Asia is expected to be the world’s fastest growing subregion in 2016 and 2017, despite challenging global conditions and the world economy stumbling in 2015. The WESP Report identifies five major headwinds for the global economy: 1. Persistent macroeconomic uncertainties; 2. low commodity prices and diminished trade flows; 3. Rising volatility in exchange rates and capital flows; 4. stagnant investment and productivity growth; and 5. continued disconnect between finance and real sector activities.
The Report also shares some positive recent trends in environmental sustainability, suggesting that some de-linking between economic growth and carbon emission growth may have started to occur.
“For the first time in 20 years, the global energy related carbon emissions experienced no growth in 2014”, Dr. Kumar stated, the only exception being of 2009 when the global economy contracted.
Zooming in on the subregion, Dr. Kumar stated: ‘India’s economy, which represents over 70% of South Asia’s GDP, is expected to grow by 7.3% in 2015-16 and 7.5% in 2016-17. India will therefore stand as the world’s fastest growing large economy.’ he said. ‘As in other countries of the subregion, the macroeconomic environment in India has improved. India has demonstrated resilience and has robust macrofundamentals for sustaining high growth, in spite of the turbulent and uncertain global environment.’
The Year-end Update of the Economic and Social Survey 2015 produced by ESCAP was introduced to the press during the same event. The annual Survey is a flagship publication of ESCAP.
Presenting some key findings from the Survey, Dr. Kumar stressed that a key challenge was to make growth more inclusive; inclusiveness being central to sustainable development. ‘Growth prospects are held back across the subregion by energy and infrastructure constraints. Large gender gaps, including in labour force participation, also cost the subregion dearly’, he noted. ‘Social sectors spending that are generally low in the subregion, even compared with China, need a critical boost. In addition, delays in economic reforms, low productivity in agricultural and segments of the service sector, and fiscal reform to boost revenues represent other policy challenges.’ ‘Fiscal policy can play a proactive role to overcome these challenges and stabilize the economy, to support inclusive and long-term growth and for fiscal space contingent on tax and other reforms.’
The WESP Report, available from http://bit.ly/WESP, is produced at the beginning of each year by the United Nations Department of Economic and Social Affairs (UN/DESA), the United Nations Conference on Trade and Development (UNCTAD), the five UN Regional Commissions and the World Tourism Organization. The Roundtable Discussion was organized by the United Nations Information Centre for Nepal and Bhutan jointly with the South and South-West Asia office of UNESCAP.