South Asia Economic Focus, Spring 2017 : Globalization Backlash

South Asia remains the fastest growing region in the world. With a strong performance in the eastern part of the region – in particular in Bhutan, Bangladesh and India – the region defied disappointing world growth in 2016. Inflation slowed down in the second half of 2016, mainly due to lower food p...

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Main Author:	World Bank
Format:	Serial
Language:	English en_US
Published:	World Bank, Washington, DC 2017
Subjects:	ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC RISKS EXTERNAL VULNERABILITY FISCAL POLICY INFLATION AND PRICES INVESTMENT MACROECONOMIC DEVELOPMENT AND OUTLOOK TRADE
Online Access:	http://hdl.handle.net/10986/26373

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recordtype	oai_dc
spelling	okr-10986-263732021-04-23T14:04:35Z South Asia Economic Focus, Spring 2017 : Globalization Backlash World Bank ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC RISKS EXTERNAL VULNERABILITY FISCAL POLICY INFLATION AND PRICES INVESTMENT MACROECONOMIC DEVELOPMENT AND OUTLOOK TRADE South Asia remains the fastest growing region in the world. With a strong performance in the eastern part of the region – in particular in Bhutan, Bangladesh and India – the region defied disappointing world growth in 2016. Inflation slowed down in the second half of 2016, mainly due to lower food prices, but appears to be turning up again. Despite recent real exchange rate appreciation, current account balances are mostly in order throughout the region. After a sharp decline triggered by lower oil prices, remittance inflows are stabilizing in most countries and international reserves are mostly at comfortable levels. Progress on fiscal consolidation has been more gradual and public debt levels remain high. South Asia’s performance will maintain momentum, with the gap between its growth rate and that of East Asia slightly widening over time. Regional growth is expected to surpass 7 percent from 2018 onwards. Robust domestic demand, an uptick in exports, and steady FDI inflows underlie this positive outlook. But with financial sector risks remaining, creating financing opportunities for private investment remains a challenge. Pressures against international trade are mounting. The negotiation of mega-regional trade agreements stalled, the number of protectionist measures has increased, and existing agreements may be reconsidered. South Asia was already less integrated in global merchandise trade than other regions. In light of current pressures, a legitimate question is whether it should focus on exports as a driver of economic growth and job creation. However, the prospects for the region are better than it seems. The stalled mega-regional trade agreements, which did not include any South Asian country, were expected to reduce South Asia’s competitiveness. Simulations on the impact of hypothetical new trade barriers applied across the board suggest that the harm for the region would be limited. And in a scenario where hypothetical new trade barriers would be applied selectively, South Asia could actually benefit from trade diversion. The region also stands to gain from the observed growth recovery in advanced economies, because they are the main markets for its exports. The current globalization backlash should thus not dissuade South Asian countries from having a stronger outward orientation. But the gains for the region would be larger if its exports were more diversified and its supply response were more elastic. 2017-04-13T21:15:05Z 2017-04-13T21:15:05Z 2017-04 Serial 978-1-4648-1095-4 http://hdl.handle.net/10986/26373 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Publication South Asia India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC RISKS EXTERNAL VULNERABILITY FISCAL POLICY INFLATION AND PRICES INVESTMENT MACROECONOMIC DEVELOPMENT AND OUTLOOK TRADE
spellingShingle	ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC RISKS EXTERNAL VULNERABILITY FISCAL POLICY INFLATION AND PRICES INVESTMENT MACROECONOMIC DEVELOPMENT AND OUTLOOK TRADE World Bank South Asia Economic Focus, Spring 2017 : Globalization Backlash
geographic_facet	South Asia India
description	South Asia remains the fastest growing region in the world. With a strong performance in the eastern part of the region – in particular in Bhutan, Bangladesh and India – the region defied disappointing world growth in 2016. Inflation slowed down in the second half of 2016, mainly due to lower food prices, but appears to be turning up again. Despite recent real exchange rate appreciation, current account balances are mostly in order throughout the region. After a sharp decline triggered by lower oil prices, remittance inflows are stabilizing in most countries and international reserves are mostly at comfortable levels. Progress on fiscal consolidation has been more gradual and public debt levels remain high. South Asia’s performance will maintain momentum, with the gap between its growth rate and that of East Asia slightly widening over time. Regional growth is expected to surpass 7 percent from 2018 onwards. Robust domestic demand, an uptick in exports, and steady FDI inflows underlie this positive outlook. But with financial sector risks remaining, creating financing opportunities for private investment remains a challenge. Pressures against international trade are mounting. The negotiation of mega-regional trade agreements stalled, the number of protectionist measures has increased, and existing agreements may be reconsidered. South Asia was already less integrated in global merchandise trade than other regions. In light of current pressures, a legitimate question is whether it should focus on exports as a driver of economic growth and job creation. However, the prospects for the region are better than it seems. The stalled mega-regional trade agreements, which did not include any South Asian country, were expected to reduce South Asia’s competitiveness. Simulations on the impact of hypothetical new trade barriers applied across the board suggest that the harm for the region would be limited. And in a scenario where hypothetical new trade barriers would be applied selectively, South Asia could actually benefit from trade diversion. The region also stands to gain from the observed growth recovery in advanced economies, because they are the main markets for its exports. The current globalization backlash should thus not dissuade South Asian countries from having a stronger outward orientation. But the gains for the region would be larger if its exports were more diversified and its supply response were more elastic.
format	Serial
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	South Asia Economic Focus, Spring 2017 : Globalization Backlash
title_short	South Asia Economic Focus, Spring 2017 : Globalization Backlash
title_full	South Asia Economic Focus, Spring 2017 : Globalization Backlash
title_fullStr	South Asia Economic Focus, Spring 2017 : Globalization Backlash
title_full_unstemmed	South Asia Economic Focus, Spring 2017 : Globalization Backlash
title_sort	south asia economic focus, spring 2017 : globalization backlash
publisher	World Bank, Washington, DC
publishDate	2017
url	http://hdl.handle.net/10986/26373
_version_	1764461822611554304

South Asia Economic Focus, Spring 2017 : Globalization Backlash

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