South Asia's economic growth is expected to moderate, led by India, amidst a variety of factors including fading post-pandemic demand, higher interest rates, reduced government spending, and weaker exports. Yet, India is projected to maintain a steady growth rate for the upcoming fiscal years, according to the World Bank.
India's economy is forecasted to grow robustly at 6.3% in the fiscal year 2023-24. While this figure is slightly weaker than the 7.2% growth estimated for the fiscal year 2022-23, it is still a commendable rate. Looking further ahead, the country's growth rate is expected to improve slightly to 6.4% in the fiscal year ending March 2025.
According to InvestingPro data, India's growth is supported by strong players in the Financial Services industry, like INBF. The company has shown strong earnings, which should allow management to continue dividend payments, an InvestingPro Tip that often indicates financial stability. INBF has also seen a strong return over the last three months, which could be a positive sign for investors.
While India continues to outperform other developing regions with a projected growth of 5.8% in 2023, this pace remains below pre-pandemic levels and is deemed insufficient for achieving development goals. Lower growth rates in countries such as Bangladesh and Pakistan are contributing to this tempered outlook for South Asia.
Martin Raiser, the World Bank's vice president for South Asia, has stressed the importance of managing fiscal risks in the region amidst these constrained fiscal challenges. He also highlighted the necessity of harnessing private sector investment and implementing energy-efficient technologies through reliable power grids to ensure sustainable growth.
The World Bank's projections underscore the need for countries in South Asia to carefully navigate their economic trajectories while balancing post-pandemic recovery and long-term development goals. For investors looking at the region, it would be beneficial to consider companies like INBF, which has been trading at a low earnings multiple, another InvestingPro Tip that suggests potential value.
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