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South Asia’s economic landscape: Hope and hurdles on path to prosperity
Not all countries in the region are growing fast, and three—Afghanistan, Pakistan and Sri Lanka—are in acute crisis
South Asia has emerged as a beacon of hope in the global economy, with the World Bank predicting that the region will outshine other developing regions in the years to come. However, a deeper dive into the situation reveals a complex reality marked by both progress and challenges, says the World Bank its latest ‘South Asia Development Update, Toward Faster, Cleaner Growth.’
The report said that while certain countries in South Asia are basking in robust economic growth, and others are recovering from turbulent times, the region as a whole is advancing at a more restrained pace compared to the pre-pandemic era. This warrants concern as South Asia still has substantial ground to cover in terms of economic development. With per capita incomes averaging around US$2,000, the region falls significantly short, standing at only one-fifth of the level achieved by neighboring East Asia and Pacific countries or the upper-middle-income average, and a mere one-twentieth of the income level of high-income countries.
Though South Asia’s current growth rates may surpass those of numerous other regions, they remain insufficient for the region’s countries to attain high-income status within a single generation. Moreover, not all nations within South Asia are experiencing rapid growth; Afghanistan, Pakistan, and Sri Lanka find themselves mired in acute crises.
To draw a parallel, South Asia’s progress is akin to mountaineers navigating the foothills of the Himalayas. Some have scarcely departed from base camp, while others are advancing briskly but remain at a lower altitude. Regardless of their current position, every country in the region has a long journey ahead, and the path ahead is poised to become even more formidable.
The “South Asia Development Update: Toward Faster, Cleaner Growth,” released last week provides policymakers with a roadmap to expedite their journey. This report underscores four pivotal components for success:
1. Boosting Private Investment: Robust private investment stands as a cornerstone for catching up with high-income countries and facilitating the transition to cleaner energy sources. Unfortunately, private investment growth in all South Asian countries, except one, has decelerated compared to the pre-pandemic period. To reignite private investment, policymakers must prioritize infrastructure development, enhance the business environment, ensure access to credit through a robust financial system, and eliminate market distortions.
2. Restoring Fiscal Sustainability: Many nations in South Asia carry a substantial debt burden, a roadblock to economic prosperity. Over the past decade, South Asia has experienced an above-average increase in public debt. High public debt stifles private investment, constrains spending on essential infrastructure and human capital, and reduces resilience. Tackling this challenge necessitates a combination of revenue augmentation, increased spending efficiency, and the implementation of robust fiscal regulations.
3. Speeding the Energy Transition: South Asia has made strides in adopting basic energy-saving technologies but lags in embracing advanced ones. Modernizing the economy and improving energy efficiency will enable the region to keep pace with the global energy transition.
4. Maintaining a Healthy Labor Market: The energy transition heralds new employment prospects but also poses the risk of leaving lower-skilled, informal workers with pollution-intensive jobs behind. Access to education, training, finance, and markets can aid workers in transitioning to new sectors. A strong labor market, fortified with effective social safety nets, eases the path for displaced workers.
The road to prosperity demands sustained high growth rates over extended periods. Many nations have seen their aspirations dashed as growth faltered following an initial surge. However, with the right policies and investments, South Asia can surmount these challenges and reach the summit, securing sustainable livelihoods for its people on a habitable planet. Achieving this goal will necessitate concerted efforts from policymakers and stakeholders across the region.
News
New landslide alerts as Ditwah aftermath worsens
Death toll hits 627, over 2.17 mn affected across 25 districts
The Disaster Management Centre (DMC) has issued fresh landslide warnings as relentless heavy rains continue to pound regions still reeling from Cyclone Ditwah.
The Department of Meteorology has cautioned that thunderstorms accompanied by heavy rainfall are likely across parts of the Western and Sabaragamuwa provinces, as well as Galle and Matara districts. Rainfall is expected to intensify further on the 9th, 10th, and 11th of this month.
Authorities urged the public to stay indoors in safe buildings or vehicles and avoid open areas such as coconut and tea plantations, playgrounds, and reservoirs, during adverse weather events. The public has also been advised against using fixed-line phones, electrical appliances, and open vehicles like bicycles, tractors, and boats due to the risk of lightning strikes and strong winds.
With the northeast monsoon gradually intensifying, occasional rains are also expected in the Northern, North Central, Eastern, and Uva provinces, with some areas of the Batticaloa district expected to receive up to 75 mm of rainfall. Misty conditions may affect parts of the Western, Sabaragamuwa, Central, and Uva provinces during early mornings.
The DMC has said the floods and landslides, triggered by Cyclone Ditwah, have so far claimed 627 lives, with 190 people still missing. More than 2.17 million people, across 25 districts, have been affected, including 611,530 families. A total of 4,517 houses have been destroyed, and 76,066 partially damaged, leaving over 80,500 homes affected, nationwide.
Kandy is the hardest hit District, recording 232 deaths, 81 missing persons, 1,800 fully destroyed houses, and over 13,000 partially damaged homes. Puttalam and Kurunegala reported 573 and 480 fully destroyed houses, respectively, while Kegalle, Ratnapura, Badulla, and Gampaha also suffered extensive property losses.
Authorities have set up 956 safety centres across the country, currently sheltering 27,663 families, totaling 89,857 people. Relief and rehabilitation efforts are ongoing, with priority given to food, water, and medical aid. Officials warned residents in landslide-prone areas to remain in shelters until conditions stabilise.
by Chaminda Silva
News
Over 35,000 drug offenders nabbed in 36 days
In a massive nationwide crackdown under the Ratama Ekata (A Nation United) Drug Prevention Programme, police have taken 35,855 drug traffickers and users into custody across the country in just 36 days, according to Deputy Inspector General of Police Ashoka Dharmasena.
During the operation, authorities had seized 268 kilos of heroin and 994 kilos of ‘Ice’ (crystal methamphetamine), Dharmasena added.
He also highlighted that since January 2025, the ongoing campaign had resulted in the confiscation of 1,754 kilos of heroin, 3,535 kilos of ‘Ice,’ and 15,975 kilos of cannabis, marking a significant blow to drug networks operating nationwide.
The Police Narcotics Bureau Chief said that the drive was part of an ongoing effort to curb drug abuse and trafficking across the country, sending a strong message to offenders that law enforcement would leave no stone unturned in tackling the menace.
by Norman Palihawadane and Hemantha Randunu
News
Rising water level in Malwathu Oya triggers alert in Thanthirimale
The Hydrology and Disaster Management Directorate yesterday issued a cautionary alert as the water level in the Malwathu Oya continued to rise steadily, increasing the possibility of localised flooding in vulnerable settlements downstream.
As of 3.30 p.m. yesterday, the river gauge at Thanthirimale reported a water level of 6.48 metres, surpassing the official alert threshold of 5.00 metres and edging closer to the minor flood level of 6.80 metres. Officials classified the situation as “Alert – Rising”, prompting heightened field surveillance.
“We are monitoring the trend closely because the gauge shows a continuous rise. Even moderate rainfall upstream could elevate the risk of inundation across low-lying agricultural communities,” said a senior hydrology officer attached to the monitoring team.
Director (Hydrology and Disaster Management) Eng. L. S. Sooriyabandara, reviewing the bulletin, said the Department was alerting regional disaster coordinators to ensure preparedness measures were in place.
“Our teams are following this closely. Residents living adjacent to low-elevation areas of Malwathu Oya should stay updated on advisories issued over the next 24 hours,” he said.
The situation across other major river systems remained stable. Readings in Kelani, Kalu, Nilwala, Gin, Kirindi and Mahaweli rivers indicated no immediate threat. For instance, the Kelani Ganga at Nagalagam Street recorded 2.80 ft—well below its alert level of 4 ft—while Ratnapura on the Kalu Ganga continued at a safe 2.04 m against its alert threshold of 5.20 m.
Checking Officer W.A.S. Saumya (H.D.S.-Act) said that the forecast remains favourable, with many basin stations recording minimal rainfall during the six-hour interval up to 3.00 p.m. “Although the overall rainfall patterns appear low, it is critical not to be complacent given upstream variability,” Saumya said.
The latest river assessment bulletin was prepared by Duty Hydrology Analyst K.K.C.U. Dilshan, who confirmed that monitoring will continue overnight.
Authorities urged farming communities, school transport operators and residents living close to the floodplain of Malwathu Oya to remain cautious, refrain from night-time river crossings and heed updates issued through local administrative units and disaster offices.
By Ifham Nizam
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