The World Bank (WB) has named South Asia as the fastest growing region in the world (in 2016). However, the global lender said that the region is the least integrated in the world, thus, preventing South Asian countries from benefitting from intra-regional trade.
In its latest report (published on November 5), Asia Foundation stated that the South Asian countries should consider the WB’s view before preparing their future trade policies. According to the report – titled: “South Asian regionalism: what hopes after SAARC meltdown?”, less than 5% of South Asia’s trade takes place within the region and it shows the region is least integrated in the world. “In comparison, intra-regional trade in the ASEAN region is around 30%, the European Union (EU) around 60% and continental Africa around 12%. This stands as a regional loss ready to cut-short South Asia’s rare moment at the top rung of the growth ladder,” added the report.
Meanwhile, the WB has congratulated South Asia for solidifying its rank as the world’s fastest growing economic region in 2016, saying in a report that the region could also manage to hold this position in 2017. The Bank explained that the region, with a young population of 1.6 billion and a growing consuming class, attracts major global producers. As a result, the region’s imports have increased at an impressive rate of 7.2% in recent times. However, South Asian exporters are not benefiting from this regional boom.
The WB also urged India, the region’s largest economy, to take necessary steps to integrate South Asia. The international financial institution, which provides loans to developing countries for capital programmes, said that India’s “neighbourhood first” policy failed to realise that an “integrated South Asia” would be good not only for it, but also for its neighbours. The WB is of the opinion that India will have to resolve its outstanding issues with neighbouring Pakistan in order to grab new opportunities. According to the global lender, South Asia should tackle its old problems first to become the most prosperous region in the world.
The WB further said that the India-Pakistan tension is not good for smaller South Asian countries, like Bangladesh, Sri Lanka, Nepal and Bhutan. The smaller nations in the region are fast losing their patience at the lack of progress, said the Bank. In its report, the WB clearly mentioned that Bangladesh is the major loser as the country sits in between India’s north-eastern part and mainland economic centres. With India desperately trying to jumpstart lagging economies in its north-eastern provinces, it can integrate Bangladesh with fast-growing markets in its western and northern parts.
The WB once again urged India, Nepal and Bhutan to help Bangladesh by utilising their massive hydropower-generating potential. India (Nepal and Bhutan) should not forget that Bangladesh has vast natural gas reserves that could bolster their energy security.
Asia Foundation believes that the WB report can help all the South Asian countries explore these under-exploited possibilities and make the region as the most developed one (in terms of global geopolitics) in the coming years. It’s only then when a true South Asian integration will be possible.