Perfect storm: COVID-19 will cripple South Asia’s economies
“South Asia finds itself in a perfect storm of adverse effects. Tourism has dried up, supply chains have been disrupted, demand for garments has collapsed and consumer and investor sentiments have deteriorated,” the report says.
After what the bank calls“disappointing” growth rates in previous years, in the fiscal year that started on April 1, the country’s GDP growth is projected to stand between 1.5 and 2.8 percent. While the forecast expects India to face the mildest impact of the COVID-19 crisis, the negative effect is still set to overtake the signs of a rebound that were seen at the end of 2019.
Other countries in South Asia such as Nepal, Bhutan and Bangladesh are also expected to suffer a steep decline in economic growth. The Maldives is expected to be hit hardest, with its economy possibly contracting up to 13 percent this year. Pakistan, Afghanistan, as well as Sri Lanka could also fall into recession due to the pandemic. However, in the worst-case scenario the whole region would experience a contraction of GDP.
The crisis is likely reinforce inequality in South Asia, with many of the poorest facing a higher risk of food insecurity. While there are no signs of widespread food shortages so far, the bank warns that protracted lockdowns could deteriorate the situation.