South Asia GDP may moderate to 5.1pc in FY2019-20

South Asia economies are projected to contract from 5.4% to 5.1% in FY2019-20 given ongoing security concerns in the region, according to a Fitch Solutions report, according to a report by https://sbr.com

Pakistan, in particular may see its GDP growth slow down to 2.7 per cent from around 3.3 per cent in the previous year. Bangladesh's economy could also moderate from 8.1 per cent to 7.8 per cent, whilst India and Sri Lanka are expected to remain flat at 6.8 per cent and 3.2 per cent, respectively.

The report cited that heightened geopolitical tensions between India and Pakistan, as well as the Easter Sunday bombing in Sri Lanka as factors that may affect its growth.

The Indian Air Force launched air strikes on Pakistan last February in response to an attack by a terrorist group in Kashmir on Indian paramilitary forces. Although the tensions have eased since, investors remain uncertain, which translated to downward pressures on growth.

As a result, the incident could likely affect Sri Lanka's tourism industry, which accounts for 11 per cent of its GDP. The report noted that tourist arrivals have already seen a YTD contraction at 13.4 per cent in June compared to 15.2 per cent last year.