New Delhi, April 9, 2026: Amid headwinds from global energy market dislocations on the back of the Iran war, South Asia’s growth remains on the upside, according to the World Bank’s latest projections for the region.
The National Council of Applied Economic Research (NCAER),in collaboration with the World Bank, organiseda discussion on the Bank’s latest South Asia Economic Update (April 2026) and its implications for India.
The discussion, chaired by the Honourable Vice Chairman of NITI Aayog, Shri Suman Bery, featured the World Bank South Asia Chief Economist, Dr Franziska Ohnsorge and the World Bank Lead Economist for India, Mr Aurelien Kruse, who presented the Report. Dr Sudipto Mundle, Chairman of the Board of Centre for Development Studies and Dr Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development, served as discussants.
The April 2026 edition of the Report presents an in-depth analysis of the role of industrial policy in development. It examines key features of South Asia’s industrial policies, their impact on trade, and how the region can maximize gains from such policies. The report also explores recent trade reforms and the reshaping of global value chains driven by AI.
In his opening remarks, Shri Suman Bery said, “The steady rise in India’s economic status as a large economy, at market prices, is due to the fact that the country has not faced any significant financial crises along the way. In this context, the World Bank’s report on South Asia is an important empirical document for the region.”
Mr Bery also advised India’s States and Union Territories to consolidate the gains of the nation’s economic growth rather than fragment its labour markets, and to ensure that the gains from trade can help augment productivity and efficiency.
Dr Franziska Ohnsorge said, “The South Asian region is the fastest growing in the world, primarily because of the rapid growth in India. The medium-term economic outlook in the South Asian region is also very encouraging, notwithstanding the overall slowdown because of the energy crisis caused by the impact of the ongoing war in the Middle East. In the longer term too, India is slated to grow rapidly due to the advent of trade reforms and their distributional impact.”
She said that “one of the biggest challenges for South Asia is the need to create more and better jobs, especially because over the next 10-15 years, about 280 million young people in this region will enter the workforce.”
In his remarks, Dr Sudipto Mundle said, “A conspicuous development witnessed in the Indian economy has been its growth paradox—this is reflected in the fact that even though India has consistently been one of the fastest growing major economies of the world at a rate of about 6%, but unemployment in the country has also been higher. This growth paradox creates a conundrum for policymakers—should policy focus on GDP growth or on employment growth?”
Dr Nagesh Kumar suggested that the region “is exhibiting very robust growth, despite the challenges springing from the Middle East conflict. However, this growth should be supported by a dynamic industrial policy that keeps an eye on the global context and manufacturing trends.”
The report identifies key challenges, including heightened geopolitical risks affecting energy prices, persistent inflationary pressures, weaker external demand, and constrained fiscal space. At the same time, the region continues to rely heavily on domestic demand.
Over the medium term, trade reforms across South Asian countries could unlock additional growth by reducing barriers, particularly in emerging export sectors. However, accelerating job creation is becoming increasingly difficult, as employment prospects weaken in activities exposed to AI.
