Daijiworld Media Network – New Delhi

New Delhi, Apr 9: India is set to remain the strongest pillar of South Asia’s economy, with the World Bank revising its growth forecast for the country upward to 6.6 per cent for 2026-27, from an earlier estimate of 6.3 per cent. The revision reflects confidence in India’s resilience despite mounting global uncertainties.

The updated projection comes at a time when South Asia is facing pressure from geopolitical tensions and volatile energy markets. While the region’s overall growth is expected to slow, India continues to stand out as the primary driver, providing stability in an uncertain economic environment.

According to the World Bank’s latest South Asia Economic Update, regional growth is projected to decline to 6.3 per cent in 2026, down from 7.0 per cent in 2025. The slowdown is largely attributed to ongoing conflicts in the Middle East and fluctuations in global energy prices, which have particularly impacted import-dependent economies.

Despite these challenges, India’s economy is projected to grow 7.6 per cent in 2025-26, before moderating slightly to 6.6 per cent in the following fiscal. The upward revision highlights strong domestic demand as a key factor helping the country withstand external shocks.

“Despite a challenging global environment, South Asia’s growth prospects remain strong,” said Johannes Zutt, underlining cautious optimism for the region.

The World Bank cautioned that South Asia remains vulnerable to several risks, particularly its heavy reliance on imported energy. Any escalation in geopolitical tensions could trigger higher oil prices, leading to rising inflation, tighter monetary policies and weaker remittance inflows.

World Bank President Ajay Banga warned that ongoing conflicts are likely to slow global growth and keep inflation elevated, with spillover effects on emerging markets, including South Asia.

The report also flagged structural challenges such as climate-related disruptions and financial instability, which could further impact the region’s recovery and growth trajectory.
While India continues to anchor the region, other South Asian economies show uneven performance.

• Bangladesh is expected to grow 3.9 per cent in 2025-26 amid recovery from political unrest.

• Bhutan is projected to expand by 7.1 per cent, driven by hydropower projects.

• Sri Lanka may see growth slow to 3.6 per cent in 2026, impacted by rising energy costs.

• Maldives is likely to witness a sharp slowdown to 0.7 per cent, affected by tourism and financing pressures.

• Nepal is forecast to grow 2.3 per cent, with gradual improvement expected.

The report further noted that while South Asian countries have intensified industrial policy measures, outcomes have been mixed. Efforts to curb imports have shown results, but export growth has yet to gain significant momentum.