Hailing India for leading economic recovery in South Asia, the World Bank has said that India will grow by 8.5 percent in 2010 and 9 percent in 2011. “The recovery of Indian GDP could be even faster than what is projected, but rising interest rates, a small appreciation of the rupee, and continued low growth in high-income countries weigh on the recovery,” said the World Bank report titled ‘South Asia Economic Update 2010: Moving Up and Looking East.’

The report mentioned that South Asia’s recovery has been strong since March 2009. “South Asia is poised to grow by about 7 percent in 2010 and nearly 8 percent in 2011, due to the strong recovery in India, good performance in Bangladesh, post-conflict bounce in Sri Lanka, recovery in Pakistan, and turnarounds in other countries, including Afghanistan, Bhutan, and Maldives,” the report added.

The report said that the drop in growth during the financial crisis in the South Asia was the smallest among all regions.

Giving a rationale for its optimistic projection, the report also said that one of the key new drivers is likely to be the rise of a globally competitive manufacturing sector. “In the first three quarters of 2009, South Asia remarkably attracted some 40 percent of total investment commitments in private participation in infrastructure projects in the developing world worth some record 26 billion dollars,” said the report.

The report noted that the growth in the South Asia region had bounced back almost to pre crisis peak levels. During financial crisis, most of the South Asian countries supported timely policy interventions which led to recovery and accelerating growth, said the Washington DC based bank in its report.

“The recovery is being led by rising domestic confidence and is balanced in terms of domestic versus external demand, consumption versus investment, and private demand versus reliance on stimulus,” commented Dipak Dasgupta, principal author of the report.

According to report ‘over the past fifteen years the region has become much more open - and it appears that the form of openness it has chosen has provided resilience in the face of recent shocks.’

However, the global bank is not very happy with the performance of three South Asian countries - Pakistan, Nepal and Maldives and projected that it will grow about 4 percent in 2011 for all three countries. “Not everyone is doing equally well, with slower recovery in countries with weaker fundamentals, those with unresolved conflict or post- conflict issues, and those that were heavily exposed to the global downturn (Maldives, Nepal, and Pakistan),” said Dasgupta.

As for the negatives, the Bank report also highlighted certain areas of concern - the rising inflationary pressures, conflict and insecurity are major concerns for the future growth. “Food prices have been rising especially sharply in recent months, because of poor weather in India compounded by delayed adjustment to higher global prices.”