Economic Buzz: South Asia expected to slow to 6.3% in 2026 from 7% in 2025, says World Bank

World Bank stated in a latest update that growth in South Asia is expected to slow to 6.3% in 2026?from 7% in 2025?due to disruptions in global energy markets. The World Bank Group in its twice-a-year regional outlook that working with Industrial Policy, projects growth to recover to 6.9% in 2027. The report says, despite the near-term slowdown, South Asia continues to grow faster than other emerging-market and developing economies. The growth outlook is driven primarily by India?s performance, underpinned by robust domestic demand as well as tariff cuts and recent trade agreements, including the free trade agreement with the European Union. Given the region?s reliance on imported energy, South Asia?s outlook is vulnerable to spillovers from the current conflict in the Middle East and is exceptionally uncertain. A prompt resolution would lift growth prospects, while further dislocation in global energy markets could raise inflation, necessitate monetary policy tightening, and dampen remittances.

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