The emergence of a new services economy, in the post Covid phase, is expected to create an opportunity for South Asia to shift gears and move away from the traditional manufacturing-led growth model in middle-income countries. This shift will lead to dependence on a services-led development model, as economic growth starts to pick up in the region, a World Bank report said.
As a result of technological changes amid the pandemic, services value added has increased as a share of GDP regardless of the level of development. And in most countries in the region, the share of services in GDP significantly exceeds what should be expected, given its development stage.
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The report noted that besides Bangladesh, the share of manufacturing in GDP for other countries in the region is mostly below the global trend.
As South Asia continues on the path to recovery, the regional economy is expected to grow by 7.1 per cent in 2021 and 2022 and by 5.4 per cent in 2023. However, the report said that the strong near-term growth is “driven in part by a very low base in 2020.”
“Taken together, the average annual growth in the four years from 2020-2023 is expected to be 3.4 per cent, which is 3 percentage points below the average growth during the four years preceding the pandemic,” it said, adding that income per capita in the region is expected to reach close to the pre-pandemic level in 2021, but it is still expected to be 12 percentage points below the pre-pandemic trend level in this and the next year.
Meanwhile, last week, India achieved the milestone of administering a billion Covid 19 vaccines amid a significant drop in the number of fresh cases.
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The focus now for the Narendra Modi government is back on economic growth.
Though consumer and business confidence have started to rise, all eyes are set on Health Minister Mansukh Mandaviya especially with the festive season kicking in. The next challenge would be to inoculate the country’s children while ensuring that the country does not face another wave.
