shaktikanta das : south asia's current macroeconomic challenges and policy priorities keynote address by mr shaktikanta das, governor of the reserve bank of india, at the high - level conference co - organised by the international monetary fund ( imf ) asia and pacific department ( apd ) and the imf south asia regional training and technical assistance centre ( sarttac ), new delhi, 6 january 2023. * * * i am delighted to have been invited by the imf to join this distinguished gathering here today to discuss pathways to resilient, sustainable and inclusive growth in south asia. i am happy to note that the conference proceedings will be anchored by the research findings and policy recommendations of the book titled " south asia's path to resilient growth ". in the current international setting, global trade and growth outlook appear uninspiring, and policies have to be conducted amid a whirlwind of uncertainty. at such critical times, conferences of this nature can help us better understand the evolving scenarios and policy trade - offs. in my address today, i shall briefly cover some of my thoughts on south asia's current macroeconomic challenges and policy priorities. 2. looking back into history, the south asian region has been a key hub of ideas, commerce, art and culture, etc. the indus valley civilisation was among the three earliest civilisations on earth and was the most extensive. in the so called middle ages, trade and commerce flourished in a variety of commodities such as spices, precious metals and other minerals, handicrafts and food items. overall, the south asian region has had an outsized influence on the progress of civilisation and trade in the world. currently, the region accounts for about 25 per cent of world population. with a median age of 27 years, it is one of the youngest regions in the world. the average growth rate of the region has accelerated from 3 per cent in the 1970s to about 7 per cent in the latest decade ( pre - pandemic ). consequently, per - capita income levels have risen alongside notable progress on key development parameters. as per the imf estimates, south asia contributes nearly 15 per cent to global growth, led by india and bangladesh. the region also receives one - fifth of total remittance flows in the world. 3. the south asian region has grown, responding to formidable global challenges in the past. following the food crisis of the 1960s, the region successfully

south asian region. i have identified six such policy priorities. taming inflation 6. multiple external shocks in the form of covid related global supply chain disruptions, food and energy crisis following the war in ukraine, and financial market volatility arising from the aggressive monetary policy tightening have exerted sustained price pressures in the south asian economies, as in other parts of the world. during the first three quarters of 2022, food price inflation in south asia averaged more than 20 per cent. the region's heavy dependence on imported fossil fuels has made it vulnerable to imported fuel inflation. for successful disinflation, credible monetary policy actions accompanied by targeted supply side interventions, fiscal, trade policy and administrative measures have become the key instruments. while the recent softening of commodity prices and supply chain bottlenecks should help in lowering inflation going ahead, risks to growth and investment outlook may rise if inflation persists at high level. prioritising price stability, may therefore be the optimal policy choice in the current context for the region. the approach to disinflation, however, needs to be mindful of the rising risks to the growth outlook in an environment of deteriorating prospects for global growth and trade activity. containing external debt vulnerabilities 7. the surge in external debt in recent years and associated vulnerabilities have undermined macroeconomic stability in several countries of the south asian region. external debt, which was already elevated in low - and middle - income countries ( that include all south asian economies ) in the pre - pandemic period, surged to us $ 9. 3 trillion in 2021 from us $ 8. 2 trillion in 2019, an increase of us $ 1. 1 trillion. 2 / 5 bis - central bankers'speeches 8. the debt service suspension initiative ( dssi ) was set up by the g20 in may 2020. up to december 2021, an estimated us $ 12. 9 billion of debt service was deferred. according to the world bank, 60 per cent of the 73 dssi - eligible countries are at high risk of debt distress or are already experiencing it. it is estimated that total external debt service payments on public and publicly guaranteed debt by poorest countries may rise by 35 per cent to over us $ 62 billion in 2022 and to remain high up to 2024 due to rising global interest rates and the compounding of interest on dssi debt service deferrals. 9. even though the participation of private creditors was encouraged