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World Bank: South Asia Could See Worst Economic Performance in 40 Years

Anjana Pasricha

   NEW DELHI - South Asian countries could see their lowest growth in 40
   years as lockdowns to contain the coronavirus pandemic freeze large
   parts of the domestic economies in the world's most populous region,
   according to a World Bank report.

   The South Asia Economic Focus report estimates that regional growth is
   likely to fall to between 1.8 and 2.8% in 2020, a steep drop from the
   6.3% projected six months ago.

   "South Asia finds itself in a perfect storm. Tourism has dried up,
   supply chains have been disrupted, demand for garments has collapsed,
   consumer and investor sentiments have deteriorated, international
   capital is being withdrawn and inflows of remittances are being
   disrupted," according to the report.

   South Asian countries have reported relatively low numbers of
   coronavirus infections compared to several parts of the world -- about
   14,500, with India, the largest country in the region accounting for
   more than 8,000.

   But most countries in the region have imposed lockdowns amid worries
   that densely packed urban slums in cities like Mumbai and Dhaka, and a
   poor health infrastructure, will leave them struggling to cope if the
   infection spreads. There are also worries that low levels of testing do
   not reflect an accurate picture of the spread of the virus.

   "The harsh reality of inequality in South Asia is that poor people are
   more likely to become infected with the coronavirus, as social
   distancing is difficult to implement for them," according to the World
   Bank. It says they also will be the most vulnerable to job losses and
   spikes in food prices.

   Home to one-quarter of the world's population, South Asia has pulled
   millions out of poverty in recent decades, but an economic setback of
   the scale that it now faces could reverse much of those gains.

   While India, Sri Lanka, Nepal, Bhutan and Bangladesh will see a sharp
   fall in economic growth, Pakistan, Afghanistan and the Maldives are
   expected to fall into recession.

   India, the largest country in the region, was poised to recover from an
   economic slump when the pandemic shuttered the entire country. The
   lockdown is likely to be extended until the end of the month, though
   the government is considering allowing a few industries to resume
   operations in areas that are considered safe.

   However, it could take months for economies to get back on track even
   after lockdowns are lifted. "Factories will not operate at full
   capacity anytime soon. Production is not going to revive; demand is not
   going to revive immediately. It is not as if people will suddenly
   return to shopping malls," says economist Arun Kumar based in New
   Delhi. "Therefore, there will be huge joblessness and poverty."

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