Has South Asia Escaped the Worst Effects of the Global Financial Crisis?
According to a new World Bank report, Global Economic Prospects 2010 – South Asia appears to have escaped the worst effects of the global economic crisis.
The global financial crisis contributed to deceleration in real GDP growth in South Asia, from 8.7% in 2007 to 6% in 2009. This was largely driven by a pronounced decline in investment growth and private consumption. Although the global financial crisis had a sharp negative impact on South Asia, the slowdown in regional GDP growth was the lowest among all developing regions.
Since private capital inflows to South Asia is less significant as a share of its GDP as compared to other regions, the region escaped from a key transmission channel of the crisis. Also, domestic demand in the region was relatively resilient, having been cushioned by counter-cyclical macroeconomic policies. Growth is expected to rebound to 6.9 and 7.4% in 2010 and 2011.