In 2020, the Covid-19 epidemic in South Asia is generally severe, and the economic development of South Asian countries, including India, has been severely impacted. South Asia's economy is expected to shrink by 6.7% in 2020 and grow by 3.3% in 2021, according to the World Bank's Global Economic Prospects recently released. As the epidemic has not been effectively controlled and problems such as rising unemployment are difficult to be solved in the short term, the economy of South Asia is still in a "cold winter".
Regional powers have been slow to recover
India, Bangladesh and Pakistan, the three major economies in South Asia, are also the three most affected countries in the region.
Economic activity rebounded in the second half of 2020, as governments gradually eased their strict blockade measures. Even so, the outlook for the three main economies is hardly rosy.
India's GDP growth had been slowing even before the outbreak, and the outbreak has added to the country's already shaky economy. India's GDP is expected to decline by 9.6 per cent in FY2020-2021, according to the GEO, before returning to 5.4% growth in FY2021-2022, due to a sharp drop in household spending and private investment.
As one of the world's fastest growing emerging market and developing economies, Bangladesh has long relied on manufacturing exports. This model of development is particularly vulnerable to the impact of the epidemic, and economic recovery is naturally slow. According to the GEO, Bangladesh's GDP is expected to grow by 1.6% in FY2020-2021, recovering to 3.4% in FY2021-2022.
Domestic fiscal consolidation pressures and a weak service sector will continue to plague Pakistan's economic growth, and the recovery is unlikely to pick up faster. The GEO expects GDP growth to be 0.5 per cent in FY2020-2021, recovering to 2.0 per cent in FY2021-2022.
Small countries in the region have been hit hard
As small countries in South Asia, Nepal, Maldives, Sri Lanka and other countries are highly dependent on tourism for economic growth. The outbreak has had a severe impact on the world's tourism industry and the economic development of small countries in South Asia has also been severely affected.
In Nepal, for example, the government had hoped to receive two million tourists by 2020, but only 230,000 foreign tourists visited the country in the past year, according to data from Nepal's immigration department. Nepal's tourism industry has suffered its worst year since 1986.
Despite the encouraging progress in the development of Covid-19 vaccine, the negative effects of the outbreak are unlikely to fade any time soon. For example, due to the blockade measures during the epidemic, hotels in Nepal have been closed for a long time and generally encountered serious operational difficulties. Even if they are reopened, it will take time to recover.
Downside risks remain
On the whole, South Asia's economic development is still facing considerable downside risks.
While forecasting GDP growth of 3.3 per cent in South Asia in 2021, the World Bank said the forecast was based on vaccine distribution starting in the second half of 2021 and no major secondary outbreaks in the region.
In the future, if you want to make the economy back on track as soon as possible, south Asian countries not only need to be alert to the developments and its negative effects, but also alert to the key problems, such as the vulnerability of the financial system will make the government to weaken the strength of the supply of credit and financial support, the domestic difficult financing for private companies will bring debt problems, extreme weather and climate change and will give its agriculture industry such as what kind of impact... It is still a harsh winter for South Asia, a region in desperate need of economic recovery.
