Global increases in food and fuel prices and trade sanctions have further threatened food security in South Asia. In this situation, the World Bank has forecast that inflation in South Asia will be 9.2 percent this year.
Inflation will have a negative effect on people’s real income. This will cause more problems for the poor people of this region. Because people spend a large part of their income on food.
The World Bank predicted this in an article entitled ‘Unprecedented economic shocks in South Asia, mounting challenges and slowing growth’. This information was given in a press release sent Thursday (October 6) from the organization’s office in Dhaka.
According to the World Bank, South Asia is facing the long-term damage of the corona epidemic from the economic crisis in Sri Lanka, the catastrophic flooding in Pakistan, the global stagnation and the impact of the war between Ukraine and Russia. As a result, growth in the region is slowing. To this end, the emphasis must be placed on sustainable development.
According to the World Bank report, South Asia’s average growth will be 5.8 percent by the end of the year. 1 percent less than last June’s estimate. While the economic recession is throwing all South Asian countries out of balance. India’s export and service sectors are the largest economic sectors in the region. It is the Indian economy that is strongly revitalizing the economies of South Asia. In addition, tourism in the Maldives and a dynamic service sector in Nepal contribute to the growth of the region.
In a report from the World Bank, the combined effects of the coronavirus and record high commodity prices resulting from the war between Ukraine and Russia have hit Sri Lanka hard. By exacerbating the country’s debt problem, foreign reserves have declined. In this situation, Sri Lanka, which is in its worst economic crisis ever, will see its real GDP fall by 9.2 percent this year. It could fall by another 4.2 percent by 2023, the World Bank believes.
The global agency also noted that high commodity prices have exacerbated Pakistan’s external imbalances and eroded reserves. After devastating climate change, energy shortages and floods that have flooded a third of Pakistan, the country’s economy is in limbo.
Most countries in South Asia are struggling with the economic downturn, the World Bank said, although some countries are doing relatively well. India, South Asia’s largest economy, has a very strong service sector and export earnings. But at the same time, most countries are struggling to maintain their foreign exchange reserves. On the other hand, there is some relief in these two countries as the tourism industry is strong again in the Maldives and Nepal.
In this regard, Martin Riser, vice president of South Asia at the World Bank, said the region is at risk from the pandemic, global liquidity, sudden changes in commodity prices and extreme weather events. South Asian countries need to build strong economies and financial buffers to absorb these shocks. To protect the people of their own country, countries must develop sustainably.