World Bank Raises South Asia Growth Forecast to 6.9%

The World Bank raised its 2026 growth forecast for South Asia to 6.9%, marking a 60 basis point increase from its previous estimate. Chief Asia Economist Franziska Ohnsorge attributed this economic resilience to strong remittances, domestic demand, and government interventions that protected consumers from supply disruptions and high energy prices resulting from the US-Israeli war on Iran.

India, the region's largest economy, is projected to grow 7.1% in 2026/27. Despite this growth, the bank warned that risks persist, including potential agricultural disruptions caused by a strong El Niño and elevated inflation that is expected to remain high into 2027.

To maintain medium-term momentum, the World Bank urged South Asian nations to accelerate the adoption of artificial intelligence. The institution noted a significant gap in technology usage, reporting that only 23% of Indian firms use AI compared to 43% of firms in the United States.