GDP in SA to expand by 8.2% in 2006, economic activities slowed in Nepal: WB

The World Bank has estimated that South Asia (SA) will achieve 8.2 percent Gross Domestic Product (GDP) growth rate in 2006 due to the high growth rate of India.

The report, entitled ‘Global Economic Prospects 2007: Managing the Next Wave of Globalization’ said, GDP in South Asia is projected to slow gradually to a still robust 7.5 percent in 2007 and 7 percent in 2008.

“Economic activity in Nepal slowed to 1.9 percent because of the intensified conflict, a weather- related decline in agricultural production, and a decline in clothing exports,” the report added.

The report said that the expansion in the GDP growth was possible due to an estimated 8.7 percent GDP growth of India.

The report further said output in Pakistan is estimated to have slowed from 7.8 to 6.6 percent, following a return to more normal agricultural production in the wake of a bumper harvest in 2005.

In Bangladesh, growth rebounded to 6.7 percent owing to stronger remittance inflows, vibrant services and manufacturing sector output and the waning impact on agricultural output of last year’s floods.

In Sri Lanka, growth picked up to an estimated 7 percent, thanks to a good harvest, and post-tsunami recovery and reconstruction activity.

“This strong growth in the region is fueled by economic reforms that have promoted private sector–led growth, sound macro management, and greater integration with the global economy,” the report quoted Shantayanan Devarajan, World Bank Chief Economist for the South Asia region as saying.

“But the region faces several risks. Unless policymakers act early and decisively to control rising macroeconomic imbalances, inflation outturns will be higher, current account deficits larger, and the subsequent slowdown more pronounced,” he warned.

Devarajan also said that widening inequality in the region will not only make growth less potent at reducing poverty, but it may lead to new social conflict or exacerbate existing ones.

“Growth in developing countries will reach a near record 7 percent this year. In 2007 and 2008, growth will probably slow, but still likely exceed 6 percent, more than twice the rate in high-income countries, which is expected to be 2.6 percent,” the report adds. nepalnews.com pb Dec 14 06