GDP growth in South Asia as whole slipped to 4.8 percent in 2012, mainly reflecting a continued deceleration in India, slower growth in Sri Lanka and Bangladesh, and sluggish growth in Pakistan and Nepal, Regional GDP growth is projected to pick up to 5.2 percent in 2013, before accelerating to 6.0 percent and 6.4 percent in 2014 and 2015, in line with strengthening external demand, normal monsoons, and a gradual pickup in investment spending, the Bank's Global Economic Prospects (GEP) report said.
"Continued progress in fiscal consolidation and in reducing structural constraints will determine the pace of recovery," it said noting "domestic risks dominate, including a possible derailing of reforms, and weaker than expected monsoon rains."
Expecting muted global growth, led by developing world, the report said risks from advanced economies have eased and growth is firming, despite ongoing contraction in the Euro Area, "However, the pick-up in developing countries will be modest because of capacity constraints in several middle income countries," it said.
Global GDP is expected to expand about 2.2 percent this year and strengthen to 3.0 percent and 3.3 percent in 2014 and 20151.
Developing-country GDP is now projected to be around 5.1 percent in 2013, strengthening to 5.6 percent and 5.7 percent in 2014 and 2015, respectively.
Noting that growth in Brazil, India, Russia, South Africa and Turkey has been held back by supply bottlenecks, the report said: "While external risks have eased, growth in these countries is unlikely to reach pre-crisis rates unless supply-side reforms are completed."
"While there are markers of hope in the financial sector, the slowdown in the real economy is turning out to be unusually protracted," Kaushik Basu, Senior Vice President and Chief Economist at the World Bank.
"This is reflected in the stubbornly high unemployment in industrialised nations, with unemployment in the Eurozone actually rising, and in the slowing growth in emerging economies, with India's annual growth having dropped below 6 percent for the first time in 10 years."
(Arun Kumar can be contacted at firstname.lastname@example.org)