macro economic performance and prospects in south asia khatun.pdf · macro economic performance,...
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MACRO ECONOMIC PERFORMANCE, PROSPECTS AND POLICY COORDINATION IN
SOUTH ASIA
Fahmida Khatun Centre for Policy Dialogue (CPD), Bangladesh
Presented at the
South Asia Economic Summit (SAES) VII New Delhi, India
6 November 2014
ECONOMIC PERFORMANCE
2 Source: World Development Indicators, World Bank
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
GDP growth (annual %)
East Asia & Pacific* Europe & Central Asia* Latin America & Caribbean*
Middle East & North Africa* North America Sub-Saharan Africa*
South Asia
ECONOMIC PERFORMANCE
3 Source: World Development Indicators, World Bank
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Annual GDP growth (%)
Bangladesh India Pakistan Sri Lanka Nepal Bhutan Maldives Afghanistan
EXPORTS
4
0.00
10.00
20.00
30.00
40.00
50.00
60.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Exports of goods and services (% of GDP)
East Asia & Pacific* Europe & Central Asia* Latin America & Caribbean*
Middle East & North Africa* North America Sub-Saharan Africa*
South Asia
Source: World Development Indicators, World Bank
EXPORTS
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Exports of goods and services (% of GDP)
Bangladesh India Pakistan Sri Lanka Nepal Afghanistan
5 Source: World Development Indicators, World Bank
REMITTANCES
6
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Personal remittances, received (% of GDP)
East Asia & Pacific* Europe & Central Asia*
Latin America & Caribbean* Middle East & North Africa*
North America Sub-Saharan Africa*
South Asia
Source: World Development Indicators, World Bank
REMITTANCES
7
Source: World Development Indicators, World Bank
0
5
10
15
20
25
30
35
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Personal remittances, received (% of GDP)
Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka
FOREIGN DIRECT INVESTMENT
8
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
FDI net inflows (% of GDP)
East Asia & Pacific* Europe & Central Asia* Latin America & Caribbean*
Middle East & North Africa* North America Sub-Saharan Africa*
South Asia
Source: World Development Indicators, World Bank
FOREIGN DIRECT INVESTMENT
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
FDI, net inflows (% of GDP)
Bangladesh India Pakistan Sri Lanka Nepal Bhutan Maldives Afghanistan
9
Source: World Development Indicators, World Bank
INFLATION
10
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Inflation, consumer prices (annual %)
East Asia & Pacific* Europe & Central Asia* Latin America & Caribbean*
Middle East & North Africa* North America Sub-Saharan Africa*
South Asia
Source: World Development Indicators, World Bank
INFLATION
11 Source: World Development Indicators, World Bank
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Inflation, consumer prices (annual %)
Bangladesh India Pakistan Sri Lanka Nepal Bhutan Maldives Afghanistan
UNEMPLOYMENT
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Unemployment, total (% of total labor force)
East Asia & Pacific* Europe & Central Asia* Latin America & Caribbean*
Middle East & North Africa* North America Sub-Saharan Africa*
South Asia
12
Source: World Development Indicators, World Bank
UNEMPLOYMENT
0
2
4
6
8
10
12
14
16
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Unemployment, total (% of total labor force)
Bangladesh India Pakistan Sri Lanka Nepal Bhutan Maldives Afghanistan
13
Source: World Development Indicators, World Bank
OTHER CHALLENGES
Resource mobilization - not enough to meet their development needs
Average budget deficit in South Asia is highest among all regions (6.7% of GDP in 2014)
Debt-GDP ratio: South Asia has high gross government debt to GDP- increasing from 65.3% in 2013 to 68.6% in 2015
Public debt high in most countries, in Sri Lanka public debt at 74.3% of GDP, India 50.6%, Pakistan 63.7%. Public debt in Bangladesh lower, at 35.5%, also Nepal vulnerability to debt distress low at 30.5%. Maldives at an alarming 86.2% and is on an upward trend.
14
OTHER CHALLENGES
Revenue generation is challenged by a number of factors:
Low tax net
high subsidy expenditures
Low investment
implementation weaknesses
slow institutional reforms
15
PROSPECTS On the other hand, the strength of South Asian
economies was demonstrated during the financial crisis.
Resilience of remittances in South Asia helped reduce severity of impact
Export trends proved to be resilient in the wake of the crisis. (highly specialized exports helped)
Monetary and fiscal policies – low interest rate, fiscal stimulus
16
POLICY COORDINATION Public expenditure: Public expenditures in South
Asian countries need to be prioritized. Efficiency and distributional aspects are to be taken into consideration. Misuse of subsidised resources in various forms
Exchange rate: impact of exchange rate on trade balance of countries
Interest rate: interest rate cuts for improving domestic investment having impact on regional investment
Institutional reforms: existing and new. 17
Thank you
18