2023-10-19-世界银行-迈向更快_更清洁的增长_152页_2mb

South Asia Development Update: Toward Faster, Cleaner Growth (October 2023)

Core Content

This report provides an overview of the economic and development outlook for South Asia, focusing on growth, fiscal sustainability, and the energy transition. It highlights the region's progress and challenges in achieving faster, cleaner, and more sustainable growth in the context of global and regional economic conditions.

Main Findings

• Growth Outlook: South Asia is expected to grow at just under 6% in 2024-25, faster than any other emerging market and developing economy (EMDE) region. However, this growth rate is still below pre-pandemic levels, which were around 8.2% in 2022.
• Fiscal Challenges: Government debt in South Asia averaged 86% of GDP in 2022, the highest among EMDE regions. This poses a significant risk to fiscal sustainability, especially with the region's financial systems remaining fragile and vulnerable.
• Economic Vulnerabilities: The region faces risks from weak financial systems, fragile fiscal positions, and external shocks such as further economic slowdown in China or climate-related disasters.
• Energy Transition: South Asia has made progress in adopting basic energy-saving technologies, but lags behind in the adoption of more advanced energy-efficient technologies. This transition is critical for lifting productivity, reducing pollution, and decreasing reliance on fuel imports.
• Labor Market Impacts: The energy transition is expected to create significant labor market shifts, potentially leaving lower-skilled, informal workers in pollution-intensive industries behind. Green jobs are more likely to be held by higher-skilled, better-paid, and formal-sector workers.
• Policy Priorities: The report outlines key policy areas including boosting private investment, restoring fiscal sustainability, accelerating the energy transition, and maintaining a healthy labor market through education, training, and social safety nets.

Key Issues and Challenges

• Fiscal Deterioration Around Elections: In EMDEs, fiscal deficits, government expenditures, and wage bills tend to increase around election years, with mixed results in subsequent years. South Asian countries have experienced fiscal deterioration around national elections, though some have managed to avoid this trend.
• Sovereign Debt Default: The region has a high average government debt-to-GDP ratio, and the risk of sovereign debt default is elevated due to both high debt levels and rising global interest rates. Past defaults have often failed to reduce debt or borrowing costs, and successful defaults have been accompanied by debt restructuring, growth acceleration, and fiscal consolidation.
• Energy Intensity: South Asian economies are almost twice as energy-intensive as the global average. This is largely due to firm-level reductions in energy use within sectors, but smaller firms are lagging in adopting advanced technologies.
• Labor Market Shifts: The energy transition will lead to significant changes in the labor market, with pollution-intensive jobs outnumbering green jobs in most South Asian countries, except India. Workers in pollution-intensive jobs are more likely to be low-skilled and informally employed, requiring targeted support for transition.
• Policy Recommendations:
  • Private Investment: Encouraging private investment through improved infrastructure, institutional environment, and financial system efficiency.
  • Fiscal Sustainability: Increasing revenues, improving spending efficiency, and implementing stronger fiscal rules.
  • Energy Transition: Supporting the adoption of advanced energy-efficient technologies through market-based regulation, information campaigns, and reliable public power grids.
  • Labor Market Adjustment: Facilitating job creation and worker mobility, and strengthening social safety nets.

Country Developments and Regional Trends

• Economic Activity: South Asia's economic activity remains strong relative to other EMDE regions, driven by resilient exports and increasing remittances.
• Inflation: Inflation in South Asia remains high, influenced by global food price trends and local supply disruptions. It is expected to trend downward, but may be interrupted by external shocks.
• Financial Conditions: Financial systems in many South Asian countries remain vulnerable, with limited capital buffers and high exposure to sovereign debt. Central banks' monetary tightening has increased borrowing costs and depreciation pressures.
• Energy Consumption Trends: The region has seen a decline in energy intensity over the past two decades, but this has been primarily driven by firm-level efficiency gains. The adoption of advanced technologies is still limited.
• Case Studies: India has been a leader in adopting basic energy-saving technologies, while Bangladesh has also shown some progress. However, both countries face challenges in scaling up and adopting more advanced technologies.

Policy Implications

• Fiscal Management: Governments should manage and reduce fiscal risks, particularly around elections, to ensure long-term sustainability.
• Energy Efficiency: Policies should promote the adoption of advanced energy-efficient technologies to support the energy transition and improve productivity.
• Labor Market Support: Measures are needed to support displaced workers and ensure a smooth transition in the labor market, including education and training programs, and improved access to finance and markets.

Conclusion

South Asia is on a path of solid but slow progress toward faster and cleaner growth. The region has the opportunity to accelerate this transition through targeted policies and investments, but must address significant challenges in fiscal sustainability, energy efficiency, and labor market adjustment. The report serves as a guide for policymakers to navigate these challenges and achieve sustainable development.