NEW DELHI/LONDON: The World Bank raised its growth forecast for South Asia to 6.4 percent in 2024 from an earlier estimate of 6.0 percent, citing the strength of domestic demand in India and quicker recoveries in crisis-hit countries such as Sri Lanka and Pakistan.
India’s economic growth forecast for the current fiscal year, ending in March 2025, was revised to 7 percent year-on-year, up from April’s estimate of 6.6 percent, helped by a rebound in agricultural output and increased private consumption.
“You have an emerging class of consumers in India that’s driving the economy forward, you have recoveries from crises in Sri Lanka and in Pakistan, you also have a tourism-led recovery in Nepal and Bhutan,” Martin Raiser, World Bank Vice President for South Asia, told Reuters.
The upward revision confirms South Asia as the fastest growing emerging economy region monitored by the World Bank. The Washington-based lender projects South Asia will see robust 6.2 percent growth annually for the following two years.
Raiser said there was “significant upside potential” to growth with greater integration of South Asian countries into the global economy, but countries needed to stick with economic reform programs to sustain momentum.
On Wednesday, India’s central bank maintained its GDP growth forecast at 7.2 percent for the current fiscal year and shifted its policy stance to neutral.
The World Bank projected Pakistan’s economy would grow by 2.8 percent in the current fiscal year, which started in July, an increase from the previous estimate of 2.3 percent, aided by a recovery in manufacturing and easing monetary policy.
Sri Lanka, which is clawing its way out of a sovereign debt default and its worst economic crisis in decades, saw the biggest upward revision, with growth expected to come in at 4.4 percent this year and 3.5 percent in 2025.
Nepal’s growth forecast was raised to 5.1 percent from 4.6 percent for the 2024/25 fiscal year beginning mid-July, and Bhutan’s to 7.2 percent from 5.7 percent.
But Bangladesh’s growth forecast was downgraded to 4.0 percent from 5.7 percent for the fiscal year 2024/25, spanning from July to June, reflecting a slowdown in garment exports amid recent social unrest.
The World Bank recommended the region should boost women’s labor force participation — currently the lowest globally at 32 percent. Raising employment among women to levels comparable to those among men could raise output by as much as one-half in the long term, the report said.
“Bringing more women into the labor force could add significantly to the production potential,” said Raiser.
World Bank raises South Asia growth forecast to 6.4% on India demand, quicker recoveries in Pakistan
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World Bank raises South Asia growth forecast to 6.4% on India demand, quicker recoveries in Pakistan
- The upward revision confirms South Asia as the fastest growing emerging economy region monitored by the World Bank
- Bank projected Pakistan’s economy would grow by 2.8% in current fiscal year on recovery in manufacturing, easing monetary policy
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
