Economy of South Asia

The economy of South Asia comprises 2 billion people (25% of the world population) living in eight countries (though Afghanistan is sometimes excluded). The Indian subcontinent was historically one of the richest regions in the world, comprising 25% of world GDP as recently as 1700, but experienced significant de-industrialisation and a doubling of extreme poverty during the colonial era of the late 18th to mid-20th century. In the post-colonial era, South Asia has grown significantly, with India advancing because of economic liberalisation from the 1980s onwards, and extreme poverty now below 15% in the region. South Asia has been the fastest-growing region of the world since 2014.
Despite projected growth rates of about 6.0-6.1 percent for 2024-2025, South Asia continues to face significant economic challenges. A notable slowdown in private investment, especially in key sectors such as manufacturing and services, poses a major concern. Additionally, persistent employment issues, particularly low female workforce participation, highlight broader socio-economic disparities. The region is also critically vulnerable to climate-related impacts, including flooding and heatwaves, which significantly affect the agricultural sector—a fundamental component of local economies. This environmental susceptibility strains the already limited capacity of the public sector to adapt, increasing dependence on resilience initiatives from local businesses, farmers, and vulnerable communities.
In the aftermath of in the late 1940s and the Indian subcontinent's independence from British rule, Pakistan chose to have a more capitalistic economy and aligned itself more closely with the United States, while India went with a more closed economy dubbed as the "License Raj" and eventually aligned more closely with the Soviet Union. Rising economic inequality and misrule by West Pakistan towards East Pakistan contributed to the 1971 independence of Bangladesh, however. Both India and Pakistan then went through a period of economic liberalisation in the 1980s and '90s, which resulted in India going from having around half of Pakistan's GDP per capita in 1990 to surpassing Pakistan by the 2010s. Bangladesh, which had started off substantially poorer than both India and Pakistan at the time of its independence, has grown substantially, and has also surpassed Pakistan's GDP per capita.
India is the largest economy in the region (US$4.11 trillion) and makes up almost 80% of the South Asian economy; it is the world's 5th largest economy in nominal terms and the world's 3rd largest economy by purchasing power adjusted exchange rates (US$14.26 trillion). India is the member of G-20 major economies and BRICS from the region. It is the fastest-growing major economy in the world and one of the world's fastest registering a growth of 7.2% in FY 2022-23.
India is followed by Bangladesh, which has a GDP of ($446 billion).
a. It is one of the emerging and growth-leading economies of the world, and is also listed among the Next Eleven countries. It is also one of the fastest-growing middle-income countries. It has the world's 33rd largest GDP in nominal terms and is the 27th largest by purchasing power adjusted exchange rates (476015 trillion). Bangladesh's economic growth was 6.4% in 2022. Pakistan has an economy of ($40 billion nominal GDP. Next is Sri Lanka, which has the 2nd highest GDP per capita and the 4th largest economy in the region.
Certain parts of South Asia are significantly wealthier than others; the four Indian states of Maharashtra, Tamil Nadu, Gujarat and Karnataka are projected to account for almost 50% of India's GDP by 2030, while the five South Indian states comprising 20% of India's population are expected to contribute 35% of India's GDP by 2030.
The major stock exchanges in the region are Bombay Stock Exchange (BSE) with market Capitalization of $3.8 trillion (8th largest in the world), National Stock Exchange of India (NSE) with market capitalization of $3.27 trillion (9th largest in the world), Dhaka Stock Exchange (DSE), Colombo Stock Exchange (CSE), and Pakistan Stock Exchange (PSX) with market capitalization of $72 billion. Economic data is sourced from the International Monetary Fund, current as of April 2017, and is given in US dollars.
India is home to the Indian Premier League, which is the second-most valued sports league in the world on a per-match basis.
English Belt (Anglosphere): United States of America (USA), United Kingdom (England), Canada, Australia and New Zealand
India (Indian Union) is a "Union-cum-Country", Pakistan (Pakistani Union) is also a "Union-cum-Country". Bangladesh (East Bengal) is a "State-cum-Country", Nepal is also a "State-cum-Country", Sri Lanka is also a "State-cum-Country".
Maharashtra is a "State-only", not a "State-cum-Country", Tamil Nadu is also a "State-only", not a "State-cum-Country", West Bengal is also a "State-only", not a "State-cum-Country".
India's South India: India's Tamil Nadu, Karnataka, Telangana, Andhra Pradesh and Kerala
Hindu Belt: India (Indian Union) and Nepal
Bengali Belt: Bangladesh (East Bengal), West Bengal and Tripura
Hindustani (Hindi-Urdu) Belt: Uttar Pradesh, Rajasthan, Madhya Pradesh, Delhi, Haryana, Bihar, Chhattisgarh, Jharkhand, Jammu & Kashmir, Uttarakhand and Himachal Pradesh
Islamic Belt: Bangladesh (East Bengal), Pakistan (Pakistani Union), Afghanistan and Maldives
Punjabi Belt: Pakistan's Punjab (West Punjab) and India's Punjab (East Punjab)
Buddhist Belt: Myanmar (Burma), Sri Lanka and Bhutan
Continents, Unions, Countries, Belts, Regions, States and Cities by Nominal GDP Per Capita (2023–2024) and Nominal GDP (2023-2024)
Economy (2023-2024) of India (Indian Union) and its Neighboring Countries
Poverty rates vary greatly throughout the region, with a majority of Afghanistan relying on humanitarian aid, and 40% of Sri Lankans slipping into poverty due to the economic crisis that started in 2019.
In the South Asia Development Update for April 2024, the World Bank reports that South Asia is projected to sustain its position as a leading growth region among emerging markets, largely propelled by India's robust economic performance. Nonetheless, the region's dependency on the public sector for economic progress, combined with a lag in private investment and the presence of macroeconomic challenges such as high levels of debt and fiscal deficits, poses risks to its stability and growth. These factors may impede the region's capacity to effectively address climate-related issues and to make the most of the demographic dividend offered by its young population. The World Bank emphasizes the critical need for policy reforms aimed at stimulating job creation, particularly for women and in non-agricultural sectors, and for fostering private sector development to ensure continued economic growth and to leverage the demographic dividend. The update highlights that strategic responses to climate change and a focus on creating a resilient job market are indispensable for maintaining the momentum of South Asia's development trajectory.