Economic Buzz: World Bank revises forecast for South Asia, inflaton within central bank targets

World Bank stated in a latest update that the forecast for growth in South Asia has been revised in 2025, as recent GDP data from South Asian countries met or exceeded expectations. Growth is expected to slow from 6.6 percent in 2025 to 5.8 percent in 2026. Despite this deceleration, growth will remain stronger than in other EMDE regions. Growth forecasts for 2026 have been downgraded for India, Maldives, and Nepal, driven by weaker export prospects, growing foreign exchange pressures, and social unrest, respectively. Forecasts for Bangladesh and Sri Lanka have been upgraded as crises recede and current account and fiscal balances narrow, strengthening growth prospect. Inflation in the region is either within central bank targets or trending toward them. Central banks are generally easing monetary policy, although a growing share of central bank communications has expressed caution about moving too quickly in an environment of elevated uncertainty.

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