The South Asia Economic Focus is a biannual economic update presenting recent economic developments and a near term economic outlook for South Asia. It includes a Focus section presenting more in depth analysis of an economic topic of relevance for stability, growth and prosperity in the region as well as country briefs covering Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. It concludes with a data section providing key economic indicators for South Asia "at a glance". Overall, it aims at providing important background information and timely analysis of key indicators and economic and financial developments of relevance to World Bank Group operations and interaction with counterparts in the region, particularly during annual and spring meeting.

South Asia is in the midst of a demographic transition. For the next three decades, the growth of the region’s working age population will far outpace the growth of dependents. Close to one million individuals will enter the workforce every month. This large, economically active population can increase the region’s capacity to save and make crucial investments in physical capital, job training, and technological advancement. But for South Asia to realize these dividends, it must ensure that its working-age population is productively employed. As one of the most prominent labor-intensive industries in developing countries, apparel manufacturing is a prime contender. With around 4.7 million workers in the formal sector and another estimated 20.3 million informally employed (combined with textiles), apparel already constitutes close to 40 percent of manufacturing employment. And given that much of apparel production continues to be labor-intensive, the potential to create more and better jobs is immense. There is a huge window of opportunity now for South Asia, given that China, the dominant producer for the last ten years, has started to cede some ground due to higher wages. But the region faces strong competition from East Asia—with Cambodia, Indonesia, and Vietnam already pulling ahead. Plus the sector suffers from production inefficiencies and policy bottlenecks that have prevented it from achieving its potential. Against this backdrop, this report hopes to inform the debate by measuring the employment gains that the four most populous countries in South Asia—Bangladesh, India, Pakistan and Sri Lanka (hereafter `SAR countries’)—can expect in this new environment of increased competition and scrutiny. Its main message is that it is important for South Asian economies to remove existing impediments and facilitate growth in apparel to capture more production and create more employment as wages rise in China. The successful manufacturers will be those who can supply a wide range of quality products to buyers rapidly and reliably—not just offer low costs.

South Asia has grown rapidly with significant reductions in poverty, but it has not been able to match the fast-growing working age population, leading to lingering concerns about jobless growth and poor job quality. Could export growth in South Asia result in better labor market outcomes? The answer is yes, according to our study, which rigorously estimates—using a new methodology—the potential impact from higher South Asian exports per worker on wages and employment over a 10-year period. Our study shows the positive side of trade. It finds that increasing exports per worker would result in higher wages—mainly for better-off groups, like more educated workers, males, and more-experienced workers—although less-skilled workers would see the largest reduction in informality. How can the benefits be spread more widely? Our study suggests that scaling up exports in labor-intensive industries could significantly lower informality for groups like rural and less-educated workers in the region. Also, increasing skills, and participation of women and young workers in the labor force could make an even bigger dent in informal employment. The region could achieve these gains by: (i) boosting and connecting exports to people (e.g., removing trade barriers and investment in infrastructure); (ii) eliminating distortions in production (e.g., by more efficient allocation of inputs); and (iii) protecting workers (e.g., by investing in education and skills).

This report analyzes how closer regional connectivity and economic integration between South Asia and Southeast Asia can benefit both regions, with a focus on the role played by infrastructure and public policies in facilitating this process. It examines major developments in South Asian–Southeast Asian trade and investment, economic cooperation, the role of economic corridors, and regional cooperation initiatives. In particular, it identifies significant opportunities for strengthening these integration efforts as a result of the recent opening up of Myanmar in political, economic, and financial terms. This is particularly the case for land-based transportation—highways and railroads—and energy trading. The report’s focus is on connectivity in a broad sense, covering both hardware and software, including investment in infrastructure, energy trading, trade facilitation, investment financing, and support for national and regional policies.

The South Asia Economic Focus is a biannual economic update presenting recent economic developments and a near term economic outlook for South Asia. It includes a Focus section presenting more in depth analysis of an economic topic of relevance for stability, growth and prosperity in the region as well as country briefs covering Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. It concludes with a data section providing key economic indicators for South Asia "at a glance". Overall, it aims at providing important background information and timely analysis of key indicators and economic and financial developments of relevance to World Bank Group operations and interaction with counterparts in the region, particularly during annual and spring meeting.

The South Asia Economic Focus is a biannual economic update presenting recent economic developments and a near term economic outlook for South Asia. It includes a Focus section presenting more in depth analysis of an economic topic of relevance for stability, growth and prosperity in the region as well as country briefs covering Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. It concludes with a data section providing key economic indicators for South Asia "at a glance". Overall, it aims at providing important background information and timely analysis of key indicators and economic and financial developments of relevance to World Bank Group operations and interaction with counterparts in the region, particularly during annual and spring meeting.

Global recovery remains below expectations and uneven across major advanced economies. Monetary tightening in a recovering US economy and potential deflation in a weak Eurozone constitute sources of risk for developing and emerging market economies. Nonetheless, developing country growth remains fairly robust. Notably, India continues its path towards sustained and faster growth as well as macroeconomic stability thereby paving the way for a solid regional performance in South Asia. While the region s external position has been further solidified, key domestic challenges include reducing risks on the fiscal side as well as sustaining investment and export growth through structural reform and prudent macroeconomic policy. The overall short and medium term outlook for South Asia points towards continued acceleration with potential downside risks concentrated on the fiscal and structural reform side. Future growth dynamics will increasingly depend on strong investment and export performance. While a challenging task, it may afford South Asia to significantly catch up with the fastest growing region - East Asia and Pacific. This edition s special focus section takes a macroeconomic look at exports and their potential for becoming a permanent growth pillar in South Asia.