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South Asian Economies Emerge from Global Financial Crisis

A Thai worker loads boxes into an export container at the Port Authority in Bangkok (File)
A Thai worker loads boxes into an export container at the Port Authority in Bangkok (File)

Most South Asian economies are recovering from the global financial crisis, and starting to register brisk growth. The recovery has been especially swift in India, the region's biggest and fastest growing economy.

As the year draws to a close, the overall mood in India is optimistic. Businesses are planning new investments, consumers are buying new cars and homes, and stock markets are reaching their highest level in a year and a half.  

Policy makers are expecting the economy to rise by 7.5 to eight percent during the current financial year. That is far higher than forecasters predicted at the start of the year, when the global recession had sharply slowed growth.

Economists say India's economic recovery has been faster than expected. They say the world's second fastest growing economy fared better than most others because India's banking sector was unaffected by the credit crisis. And they say the economy, which relies more on domestic consumption rather than exports, was not badly hit by the downturn in the West. A widespread drought also failed to make much impact, because most of India's growth comes from its services and manufacturing sector.   

Finance Minister Pranab Mukherjee says he is encouraged by the steady growth in recent months, and is confident of an even better performance in the near future. 

"The target of growth of nine to ten percent, which we have dreamt for a very long period of time, is now within our reach, and we shall have to achieve that," he said.

The news was also good in neighboring Sri Lanka. At the start of the year, the global financial crisis and the long military conflict with Tamil Tiger rebels had slowed the economy. Foreign exchange reserves had dwindled. But the war's end in May and the return of peace has rejuvenated economic activity.

Domestic trade has expanded as the army has opened a key highway to the war-torn north. New hotels are being built and old ones renovated to accommodate tourists who are flocking back to the island nation's beaches. The stock market, spurred by a surge in foreign investment, doubled during the year.

The Central Bank says it expects growth to increase to six percent in 2010, compared to 3.5 percent this year.

Officials in Bangladesh say the nation's economy has hardly been affected by the global recession.  They are hoping to achieve six percent growth in this fiscal year. The optimism comes despite a slowdown in exports of ready made garments, which is one of the country's main industries. The International Monetary Fund says the Bangladesh economy will continue to grow steadily, but its dependence on exports means the pace will depend on recovery in Western countries.   

South Asia is one of the world's most populous regions. It is also home to millions of poor people, and economists say only high rates of growth can pull these people out of poverty.
 

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