World Bank Sees 2025 Growth Surge in South Asia, Warns of Slower 2026 Amid Trade & AI Risks

SDG 8: Decent Work & Economic Growth | SDG 9: Industry, Innovation & Infrastructure
Institutions: Ministry of Commerce & Industry | NITI Aayog

The World Bank’s South Asia Development Update (October 2025) projects that regional growth will rise to 6.6 % in 2025 before moderating to 5.8 % in 2026. The biannual report—one of the Bank’s principal data-driven assessments—combines macroeconomic forecasts, country-level datasets, and policy modelling for eight South Asian economies. It tracks indicators such as GDP, inflation, current-account balance, and sectoral output, providing an empirical view of post-pandemic recovery patterns across the region.

While the near-term outlook remains strong, the report cautions that trade shocks, AI-induced disruptions, and global uncertainty could slow momentum. A dedicated chapter on AI, Trade, and Productivity finds that AI adoption can boost productivity only if paired with trade liberalisation and labour-market adaptability. The analysis emphasises investment in skills, digital infrastructure, and safety nets to manage workforce transitions as technology and trade reshape regional competitiveness.

For India, the Update underscores the need to align AI-readiness policies with trade and labour reforms, using data-backed projections to sustain inclusive growth and build resilience against external shocks.

Follow the full report here: South Asia Development Update (October 2025)

---