- South Asia has long been seen as an economic laggard, but that could start changing.
- South Asia could sustain a growth rate of over 5% for the next few years, which would make it one of the fastest-growing regions in the emerging world.
- The inflow of foreign direct investment is helping to keep South Asia in what can be identified as the investment sweet spot.
- While falling prices for oil and other raw materials are hurting most emerging regions, they are a boon to the nations of South Asia, all of which are commodity importers.
- At a time when growth is falling sharply in most other emerging nations, South Asia has proved relatively resilient.
- Together, India, Sri Lanka and Pakistan are now growing at an average annual pace of close to 6%, compared to 2% for the emerging world outside China.
- But that spread of nearly four percentage points is the largest in the region’s post-independence history.
- Since the global financial crisis, a number of emerging markets have been ramping up debt and government spending.
- But the smaller South Asian economies have largely avoided these excesses, so they still have room to boost growth.