Innovative Financial Advisors Pvt. Ltd. - The Economic Prospects of South Asia

Innovative Financial Advisors Pvt. Ltd. complaints that reforms, political stability and demand for exports are crucial for sustained growth.

Online PR News – 13-February-2015 – New Delhi – As the world tries to come out from the global economic crisis, growth has picked up in many countries of the world. Though developed economies such as UK and US have showed signs of improvement, there still remains an area of concern over the euro-zone crisis. In Asia, China is moving towards a well monitored and structured slowdown while Japan with rise in exports showed an encouraging sign for the recession-hit economy even as doubts persist about the strength of global consumption. On the other hand, the Russian economy has been downgraded to junk status by Standard & Poor (S&P) due to reduced flexibility to cut interest rates and weak financial system as oil price drops.

Innovative Financial Advisors Pvt. Ltd. believes that the economic prospect of Asia is going to improve in the years to come. Asia’s rise will be driven by India’s momentum and soon Asian economies will become the growth engine of the world. After a 10 year low of 4.9% growth rate in 2013, South Asia rose to an estimated 5.5% in 2014. This resurgence is mainly due to India’s improved performance in the last two quarters, which is also the region’s largest economy. Innovative Financial Advisors Pvt. Ltd. complaints that reforms, political stability and demand for exports are crucial for sustained growth and our national policies should have these aspects incorporated in them. Focus needs to be directed towards mitigating vulnerability and domestic risks within the South Asian countries.

Backed by decline in inflation and rise in demand of exports amongst the developed economies, the Indian economy leads the way in recovery. The perception of policy paralysis has negative connotations to investment scenario in India. With the change in government, reforms are being initiated to make India investment friendly. The export-import trade gaps among countries such as China and India are major concerns of the region. Political instability in countries such as Pakistan, Afghanistan and Bangladesh have begun to normalize with region’s economy estimated to have grown by 6.1% in FY13-14. Industrial output was outweighed by increase in agriculture and service sector growth. The industrial output in countries such as India and Pakistan was slower as compared to Bangladesh. However, India’s major focus on ‘Make in India’ to boost the manufacturing sector and counter China will definitely improve industrial output in the coming years. The growth rate is expected to improve with increase in remittances, robust exports and increase in foreign direct investment (FDI) in the region. Lower oil prices will also raise real incomes and support consumption leading to decrease in current account deficit.

The economic forecast for the region suggests likely growth of 5.8% between 2015-2017. Bhutan is expected to grow by more than 8% while India and Bangladesh is expected to maintain its momentum by registering 7% growth in 2017. India’s current account deficit is also likely to decrease in the next two years. Greater revenue generation and mobilization will reduce the macroeconomic vulnerabilities and promote sustained growth. This has been realized by the new government in India and is also incorporated in International Monetary Fund (IMF) supported programmes in Pakistan and Bangladesh.

By Rahul Choudhury
Media Team – Innovative Financial Advisors Pvt. Ltd.
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