The World Bank has raised its 2026 growth forecast for South Asia to 6.9 percent, 60 basis points higher than its previous forecast.
Chief Asia Economist Franziska Ohnsorge told Reuters that government measures to shield consumers, strong remittances and resilient domestic demand have cushioned the region from higher energy prices. She said inflation is expected to remain elevated into 2027.
The Bank expects India to grow 7.1 percent in 2026/27, up from the 6.6 percent it predicted in June.
It warned that persistently high oil prices, a severe weather shock and a global market correction could threaten the outlook. Ohnsorge said a strong El Niño could be another risk, particularly for India.
South Asia is heavily dependent on energy imports, as is Sri Lanka, so oil prices and remittances matter to the wider regional outlook.
The World Bank also urged countries to adopt artificial intelligence to sustain growth over the medium term.
