Economic growth in South Asia is expected to increase to 6.9% this year, surpassing previous forecasts. This is due to strong domestic demand and high remittance flows to the region, keeping it resilient against global shocks.
Economic Situation Analysis
According to a new economic report on South Asia titled "Leveraging Artificial Intelligence for Growth," this strong growth is supported by significant remittance inflows and recent structural reforms. Economic growth is projected to decline to 6.7% by 2027, while challenges such as high energy prices and severe impacts of the El Niño phenomenon on agricultural production and food security persist.
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Opportunities in Artificial Intelligence
Johannes Zutt, Vice President of the World Bank for South Asia, noted: "South Asia has shown remarkable resilience in a challenging global environment. However, to sustain this trend and create more jobs, the region needs to invest in new growth drivers." He also added that countries must invest in infrastructure, skills, and enabling environments to allow workers and businesses to harness the potential of artificial intelligence.
The report also examines how strategic use of artificial intelligence can create new sources of growth. While the adoption of AI in South Asia is increasing, the region still lags behind advanced countries. About 23% of Indian companies use AI, while this figure is 43% in the United States. However, AI adoption is accelerating, and companies are using it to identify new market opportunities.
Using AI to improve public services in sectors such as health, education, and agriculture is another area with high potential. Governments are increasingly using AI to enhance public service functions, such as AI-based weather forecasts for farmers in India and AI-assisted retinal screening in Bangladesh.
However, evidence suggests that benefiting from these tools requires careful adaptation to local conditions. This includes developing small AI applications that run on simple devices with limited connectivity.
Francesca Onsurge, Senior Economist at the World Bank Group for Asia, said: "The adoption of AI could transform the development trajectory of South Asia by increasing labor productivity, expanding export opportunities, and improving public services. But to capitalize on these benefits, governments must address the fundamental gaps that hinder the adoption of this technology."
This report also suggests policy measures to strengthen workforce skills, create conducive business environments, and improve physical and digital infrastructure.
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