The World Bank cut its economic growth forecast for India and the entire South Asian region on Wednesday, citing worsening supply bottlenecks and rising inflation risks stemming from the Ukraine crisis.
India
The bank cut the growth estimate for India to 8% from 8.7% for the current fiscal year, and cut the outlook for South Asia to 6.6% from 7.6%, excluding Afghanistan.
The bank said household consumption in India will be constrained by the incomplete recovery of the labor market from the pandemic and inflationary pressures.
World Bank Vice President for South Asia Hartwig Schafer said: "High oil and food prices caused by the war in Ukraine will have a strong negative impact on real incomes."
Pakistan
The World Bank raised its growth forecast for Pakistan, the region's second-largest economy, for the current year ending in June to 4.3% from 3.4% and kept its growth forecast for next year unchanged at 4%.
The region's dependence on energy imports has meant that higher crude oil prices have forced their economies to direct their monetary policies to focus on inflation rather than reviving economic growth after nearly two years of COVID-19 restrictions.
Malpes
The WB cut this year's growth forecast for the Malpes to 7.6% from 11%, citing its large imports of fossil fuels and declining tourism from Russia and Ukraine.
Sri Lanka
It raised Sri Lanka's 2022 growth forecast to 2.4% from 2.1% but cautioned that the island's outlook was highly uncertain due to fiscal and external imbalances, as the central bank said on Tuesday that paying off foreign debt has become "difficult and impossible", as it tries to use dwindling foreign exchange reserves to import essential items such as fuel.
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