South Asia's Economic Performance Expected to Outshine Region Amid Financial Crisis

South Asia's economic growth is likely to exceed the rest of the region, despite the Asian financial crisis, according to the Asian Development Bank's "Asian Development Outlook 1999". The region has managed to avoid the impact of the crisis, with countries such as India and Pakistan showing a significant increase in their gross domestic product (GDP). The bank attributes the growth to the countries' efforts to privatize, deregulate, and liberalize trade, which will also fuel growth in the long run.

Key Takeaways:

• India's growth in 1998 was slightly higher than in 1997, with a GDP increase of 5.8 percent.
• Pakistan's GDP growth picked up in 1998, reaching 5.4 percent, and is expected to grow 5.9 percent this year.
• Bangladesh's growth was slightly lower than expected due to massive flooding, which affected agricultural and manufacturing output.
• Sri Lanka managed a fairly robust 5.3 percent growth rate, down slightly from the previous year.
• The whole sub-region's GDP increased 5.7 percent in 1998 and is expected to grow 5.5 percent this year.
• The Asian Development Bank forecasts inflation to fall to 7.6 percent, assuming no resort to printing money to finance budget deficits.
• The current account deficit in South Asia is expected to be fairly low at 3.1 percent this year, due to continued slow growth and reduction in world capital flows.

Statistics:

• GDP growth in India: 5.8 percent (1998), 5.9 percent (1999)
• GDP growth in Pakistan: 5.4 percent (1998), 3.4 percent (1999)
• GDP growth in Bangladesh: 5.7 percent (1998), slightly lower than expected
• GDP growth in Sri Lanka: 5.3 percent (1998), fairly robust
• GDP growth in South Asia: 5.7 percent (1998), 5.5 percent (1999)
• Inflation forecast: 7.6 percent
• Current account deficit in South Asia: 3.1 percent

Sources:

• "Asian Development Outlook 1999", Asian Development Bank
• COMTEX (http://www.comtexnews.com)