WB says South Asia's growth prospects dimming amid global uncertainty

Increasing domestic revenues key to stronger fiscal buffers

- 

AMID increasing uncertainty in the global economy, South Asia's growth prospects have weakened, with projections downgraded in most countries in the region. Stepping up domestic revenue mobilisation could help the region strengthen fragile fiscal positions and increase resilience against future shocks, says the World Bank in its twice-yearly regional outlook.

Released yesterday, the latest South Asia Development Update, 'Taxing Times,' projects regional growth to slow to 5.8% in 2025-0.4% below October projections before ticking up to 6.1% in 2026. This outlook is subject to heightened risks, including from a highly uncertain global landscape, combined with domestic vulnerabilities including constrained fiscal space.

"Multiple shocks over the past decade have left South Asian countries with limited buffers to withstand an increasingly challenging global environment," said World Bank Vice President for South Asia Martin Raiser. "The region needs targeted reforms to address vulnerabilities such as fragile fiscal positions, backward agricultural sectors, and the impact of climate related shocks."

Although tax rates in South Asia are often above the average in developing economies, most tax revenues are lower.