South Asia Macro Poverty Outlook Country-by-country Analysis and Projections for the Developing World Spring Meetings 2024 © 2024 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclu- sions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. South Asia Afghanistan Maldives Bangladesh Nepal Bhutan Pakistan India Sri Lanka MPO 1 Apr 24 costs. In the medium term, the anticipated reduction in off-budget transfers (OBT) AFGHANISTAN Key conditions and will negatively affect social sector service delivery for a vulnerable population. ITA challenges is prioritizing non-productive security sec- tor spending, and its insufficient policy re- Afghanistan’s economy remains weak, re- sponse to the OBT cut will exacerbate the flecting the lack of endogenous sources of service delivery vacuum. The private sec- growth compensating for the decline in in- tor remains burdened by the central bank's The economic crisis continues, causing ternational aid after the Taliban takeover. commitment to an overvalued currency decreased activity and persistent pover- The deflationary process that started in and a fragile banking sector. April 2023 continued into January 2024, ty. A combination of better supply and sustained by the appreciation of the local depressed demand results in ongoing currency and the negative income shock deflation. Off-budget transfers were re- brought about by the enforcement of the Recent developments duced in 2023, shrinking the economy opium ban. This ongoing deflation reflects and raising concerns about pro-poor a troubling inability of both private and The real GDP shrank by a cumulative 26 public sectors to stimulate sufficient de- percent during the last two fiscal years, expenditure sustainability. The Interim mand. While falling prices may offer tem- with economic activity remaining stagnant Taliban Administration’s (ITA) rev- porary financial relief to the most vulnera- during the ongoing fiscal year 2023-24. enue collection remains slightly below ble households by reducing the cost of liv- While supply conditions have eased, ag- target. The Afghani (AFN) depreciated ing, it can also harm the broader macro- gregate demand remains low, resulting in economy. Prolonged deflation can lead to a sharp decline in the general price level. against USD during Jan-Feb 2024 af- a damaging cycle where consumers delay The headline inflation turned negative in ter strengthening throughout 2023. purchases, businesses reduce investment, April 2023, and in January 2024, it reached Poverty affects half of the population, and economic growth stalls, ultimately im- -10.2 percent YoY, primarily driven by neg- with persistent high unemployment peding more sustainable poverty allevia- ative inflation in the food group (-15.1 per- tion and employment opportunities. The cent) and the non-food segment (-4.8 per- and underemployment amid contract- economic hardship has increased labor cent). Core inflation, excluding food and ing job and business opportunities. force participation, leading to a rise in un- energy prices, also fell to -6.5 percent YoY. employment as jobs are not available. A significant appreciation of AFN against About half of the country's population is the USD during 2023 contributed to the living in poverty, and around 15 million falling price of imported commodities. people are facing food insecurity. The opium cultivation ban may be causing Foreign aid is entirely off-budget, given additional deflationary pressure due to a the ITA's position on human rights, gen- decrease in farmers' incomes, estimated to der, and inclusion. While most off-budget be around $1.3 billion (about 8 percent of spending is aimed at helping the poor, the GDP) by the United Nations Office on global experience highlights sustainability Drugs and Crime, and a reduction in do- challenges and increased service delivery mestic food prices as approximately FIGURE 1 Afghanistan / Real GDP growth and contributions FIGURE 2 Afghanistan / The country is facing deflation to real GDP growth Percent, percentage points Percent 60 20 40 15 10 20 5 0 0 -20 -5 -40 Headline Inflation -10 -60 Core Inflation 2018 2019 2020 2021 2022 -15 Agriculture Industry Services Real GDP Aug-21 Dec-21 Apr-22 Aug-22 Dec-22 Apr-23 Aug-23 Dec-23 Source: National Statistics and Information Authority. Source: National Statistics and Inflation Authority. MPO 2 Apr 24 200,000 hectares of land is estimated to be but marking a 5.6 percent increase from will cause a shortage of educated and converted from illicit to licit crops. More- the same period of the previous fiscal year. skilled females in the country and may in- over, since opium cultivation is more la- The shortfall is mainly due to border taxes, duce a further reduction in OBT. The econ- bor-intensive than other crops, the ban which saw a mere one percent rise despite omy is projected to remain stagnant, with is likely to put additional upward pres- a 22 percent surge in imports. The AFN no growth in the baseline. In 2025, GDP is sure on unemployment. While declining appreciation, reduced tariffs on some food projected to barely reach 2022's level with prices might have contributed to improv- items, and lower Business Receipt Tax on 2-3 percent annual growth after contract- ing the welfare of most vulnerable house- manufacturing inputs have contributed to ing 2-3 percent in 2023, resulting in a de- holds, the overall weakness of the econ- this modest increase. Conversely, Inland crease in real per capita income. The base- omy and the lack of employment oppor- revenues increased 11.8 percent YoY, dri- line assumes a 15 percent decline in OBT tunities are likely holding back more sus- ven by the Small Taxpayer Office and in 2023 and 10 percent in the subsequent tainable poverty reduction. provincial collection. The growth was years, with domestic revenues only partial- The country's total exports in CY2023 mainly due to improved compliance and ly offsetting OBT decline amid contracting reached $1.9 billion, almost the same as in collection of arrears. For the FY2023-24 economic activity. Inflation will bounce CY2022. While coal exports fell by 46 per- budget, around AFN 295 billion is ear- back and will, on average, remain between cent, increased exports of food and textiles marked for expenses, representing a 43 6-10 percent in 2024 and 2025 because of partially compensated for this. In CY2023, percent YoY increase, mainly due to the the base effect and correction in the ex- Afghanistan’s imports surged 23 percent planned new hiring and increased devel- change rate. Inflation and low growth will YoY to $7.8 billion, resulting in a trade opment projects. Non-productive security result in high poverty, while decreased deficit of $5.9 billion, 34 percent higher spending is prioritized over social sectors, pro-poor spending due to reduced off- than the previous year. Analysis suggests significantly impacting health, agriculture, budget transfers may cause a decline in that approximately a quarter of these im- and social protection. However, attain- service delivery for health and education ports were intended for the Pakistani mar- ment seems unlikely due to limited own- and heighten vulnerability to falling into ket and financed by Pakistani importers as source collection. poverty. Unemployment and underem- authorities implemented direct controls to The Afghan financial sector cannot support ployment are expected to persist amid lim- lower imports. This explains a significant the private sector through financial interme- ited job and business prospects. increase in imports in specific categories diation. Banks face limitations in interna- There are significant downside risks to despite an overall decrease in real GDP tional payments. Due to the mandatory the baseline scenario. A higher-than-pro- and deflation. These imports subsequently transition to Islamic Finance and legal un- jected decline in off-budget transfers will enter Pakistan. Accounting for these, es- certainties around loan recoveries, banks have substantial implications for pro-poor timates suggest that imports for are not lending, and deposit withdrawal spending, having ripple effects on busi- Afghanistan are approximately $5.5 billion limits remain in place. Banks are reliant on nesses and economic activities and there- instead of $7.8 billion, resulting in a de fac- commission-based business rather than by worsening the economic downturn. to trade deficit of ~$3.5 billion. The UN core banking activities. The private sector is Insufficient investment in the country’s cash shipments of ~$1.8 billion and esti- thus deprived of meaningful access to fi- human capital will have long-term con- mated remittances at ~$2 billion more than nance and standard banking services. In ad- sequences on the country's growth covered the de facto trade deficit of ~ $3.5 dition, the capacity of the Central Bank to prospects and capacity to reduce poverty billion. The local forex market was in sur- monitor emerging risks, particularly sustainably. Faster-than-expected depreci- plus, resulting in a 27 percent AFN ap- around AML/CFT, remains unclear. ation of the Afghani will limit imports, preciation in 2023. Recently, during Jan- taking a toll on economic growth, while Feb 2024, there has been some correction, a subsequent surge in inflation will in- with the AFN depreciating by 5.4 percent tensify economic hardships. In addition, against the USD. Outlook the lack of a country-wide strategy and Revenue collection for the eleven months necessary financial support to invest in of FY2023-24 (from March 22, 2023, to Feb- The current ban enforced by the ITA climate adaptation will add additional ruary 21, 2024) totaled AFN 189 billion, on female education is endangering the downward risks to economic activity and narrowly missing the target by 2 percent economy's future. Continuing the ban poverty reduction. MPO 3 Apr 24 loss of trade preferences. Export diversifi- cation away from garments and negotia- BANGLADESH Key conditions and tion of trade agreements are key medium- term objectives. Revenue mobilization, tar- challenges iff modernization, and elimination of non- tariff barriers would promote diversifica- Table 1 2023 Macroeconomic stability and strong ex- tion and boost growth. Addressing finan- Population, million 173.0 ports underpinned 6.6 percent average real cial sector vulnerabilities and streamlining GDP, current US$ billion 437.4 GDP growth over the decade preceding regulations would support foreign invest- GDP per capita, current US$ 2529.1 the COVID-19 pandemic. A stimulus pro- ment inflows. Improving governance, a 5.0 International poverty rate ($2.15) gram and accommodative monetary policy building human capital, and mitigating cli- a 30.0 sustained modest growth during the pan- mate risks are key long-term challenges. Lower middle-income poverty rate ($3.65) a 74.1 demic. From 2016 to 2022, poverty inci- Upper middle-income poverty rate ($6.85) Gini index a 33.4 dence declined by 2.1 percentage points School enrollment, primary (% gross) b 117.7 (US$ 3.65 poverty line) and 0.7 percentage Life expectancy at birth, years b 72.4 points for extreme poverty (US$ 2.15) an- Recent developments nually. Thirty percent of the population Total GHG emissions (mtCO2e) 256.2 (51.3 million people) currently lives in Estimated real GDP growth slowed in the Source: WDI, Macro Poverty Outlook, and official data. poverty (US$ 3.65). Multidimensional first half of FY24 as private consumption a/ Most recent value (2022), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy poverty declined from 45.3 to 30.6 percent and investment growth stagnated. On the (2021). over the same period, lifting 20 million supply side, industrial growth moderated people out of deprivation of basic services. as energy shortages and import restric- Inequality based on the Gini coefficient re- tions offset steady external demand for mained unchanged at 33.4. RMG. The services sector slowed as do- Real GDP growth is expected to slow Economic conditions deteriorated in FY23 mestic purchasing power declined, while as inflation accelerated and the balance of agricultural growth remained modest. from 5.8 percent in FY23 to 5.6 percent payments (BoP) deficit widened, driven by This has impacted labor income, especially in FY24, as inflation weighs on consump- a financial account deficit. FX rationing re- for vulnerable populations working in ser- tion and import restrictions and financial stricted imports, leading to electricity vices and agriculture. sector vulnerabilities constrain private blackouts. Rising financial sector vulnera- Inflation remained elevated in the first bilities have dampened growth prospects. half of FY24, declining marginally to 9.7 investment. Poverty is projected to rise Unemployment was low in 2022 (3.6 per- percent in February 2024, driven by rising marginally in FY24, with stagnant in- cent), and the female labor force participa- food and electricity prices. Weak private equality. External buffers need to be re- tion rate (42.7 percent) was almost half that consumption growth and high inflation built to ensure macroeconomic stability. of males. However, job quality deteriorat- have halted poverty reduction. Higher Export diversification, financial sector re- ed between 2016 and 2022 as employees food prices particularly impacted poor earning more than US$ 3.65/day fell from households, which allocate over half of forms, and revenue mobilization are key their budget towards food expenditures. 77.9 to 50.2 percent. policy priorities ahead of Least Developed Bangladesh’s expected graduation from UN Bangladesh Bank (BB) raised the policy Country (LDC) graduation in 2026. LDC status in 2026 will gradually result in a rate by a cumulative 325 basis points FIGURE 1 Bangladesh / Real GDP growth and contributions FIGURE 2 Bangladesh / Actual and projected poverty rates to real GDP growth and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 15 100 250000 90 10 80 200000 70 5 60 150000 50 0 40 100000 30 -5 20 50000 -10 10 2000 2003 2006 2009 2012 2015 2018 2021 2024 0 0 Gov. cons. Exports GFCF 2010 2012 2014 2016 2018 2020 2022 2024 2026 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real GDP pc Sources: Bangladesh Bureau of Statistics and World Bank staff calculations. Source: World Bank. Notes: see Table 2. MPO 4 Apr 24 since May 2022. However, policy trans- and limited public sector wage growth. rise, underpinned by a higher outflow of mission has been impaired by a cap on The public debt to GDP ratio increased to workers and greater exchange rate flexi- lending rates. The nonperforming loan ra- 35.0 percent but remained sustainable, bility. The financial account is expected to tio increased to 9.2 percent in FY23, al- with a low risk of debt distress. return to surplus with the resumption of though this ratio understates vulnerabili- trade credit flows and a higher volume of ties due to lax regulatory definitions and external financing. Additional exchange reporting standards. rate flexibility would accelerate the stabi- The current account moved into a US$ 3.1 Outlook lization of FX reserves. billion surplus in the first seven months of The fiscal deficit is projected to stay below FY24 as exports grew by 0.2 percent and Growth is expected to decelerate to 5.6 per- 5.0 percent of GDP over the medium term. imports contracted by 16.3 percent. Official cent in FY24 from 5.8 percent in FY23 be- Nominal revenues will rise with increasing remittance growth remained muted at 3.6 fore returning gradually to its long-term trade, improving domestic activity, and percent. The financial account deficit trend above 6.0 percent. Elevated inflation ongoing efforts to strengthen the tax ad- surged to US$ 7.4 billion, led by a decline will weigh on consumption, while private ministration. Over the longer term, rising in short-term lending. The BoP deficit nar- investment will remain constrained by FX public expenditure requirements to meet rowed to US$ 4.7 billion over the first sev- rationing. As consumption growth slows infrastructure needs, mitigate climate vul- en months of FY24, compared to US$ 7.4 and the population increases, almost half nerabilities, and accelerate human capital billion over the same period of FY23. Offi- a million Bangladeshis are projected to fall investment will require the mobilization of cial exchange rates depreciated modestly, into extreme poverty (at US$ 2.15) between additional revenues, as trade-based taxes remaining insufficient to clear the FX mar- FY23 and FY24, while moderate poverty decline with tariff modernization. ket. BB intervened heavily in the market to (at US$ 3.65) increases from 29.3 to 29.4 Downside risks to the growth outlook maintain exchange rate caps. Gross FX re- percent, rising by around 0.84 million. In- have increased, with a weak global out- serves declined to US$ 20.0 billion at end- equality is forecasted to remain stagnant. look. The pace of monetary and exchange January 2024, a $4.8 billion decline in FY24, External sector pressure will ease gradual- rate reforms may be insufficient, depleting providing 3.4 months of import coverage. ly, with resilient export growth. The CAD FX reserves. Tighter liquidity could exac- The fiscal deficit narrowed modestly to 4.4 is expected to narrow further in FY24 as erbate banking vulnerabilities. Fiscal risks percent of GDP in FY23, down from 4.6 import restrictions persist before widening include revenue underperformance, real- percent in FY22, as weak revenue growth over the medium term as policies normal- ization of financial sector contingent liabil- was offset by deferred capital investment ize. Remittance inflows are expected to ities, and monetization of the deficit. TABLE 2 Bangladesh / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2020/21 2021/22 2022/23e 2023/24f 2024/25f 2025/26f a Real GDP growth, at constant market prices 6.9 7.1 5.8 5.6 5.7 5.9 Private consumption 8.0 7.5 2.0 1.4 4.9 5.3 Government consumption 6.9 6.2 8.5 10.6 9.9 7.4 Gross fixed capital investment 8.1 11.7 2.2 5.6 8.8 8.6 Exports, goods and services 9.2 29.4 8.0 0.1 7.2 6.4 Imports, goods and services 15.3 31.2 -9.8 -12.2 12.5 10.2 a Real GDP growth, at constant factor prices 7.0 7.2 6.2 5.7 5.7 5.9 Agriculture 3.2 3.1 3.4 3.1 3.1 3.2 Industry 10.3 9.9 8.4 6.6 7.2 6.8 Services 5.7 6.3 5.4 5.6 5.1 5.8 Inflation (consumer price index) 5.6 6.1 9.0 9.6 8.5 6.5 Current account balance (% of GDP) -1.1 -4.0 -0.6 0.9 0.7 -0.2 Net foreign direct investment inflow (% of GDP) 0.3 0.4 0.4 0.3 0.4 0.4 Fiscal balance (% of GDP) -3.7 -4.6 -4.4 -4.6 -4.7 -4.8 Revenues (% of GDP) 9.4 8.5 8.2 8.6 9.0 9.3 Debt (% of GDP) 32.4 33.7 35.0 35.0 35.3 36.3 Primary balance (% of GDP) -1.7 -2.6 -2.5 -2.1 -2.2 -2.3 b,c International poverty rate ($2.15 in 2017 PPP) .. 5.0 4.9 5.1 4.5 3.7 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) .. 30.0 29.3 29.4 27.2 24.3 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) .. 74.1 73.5 73.8 71.6 68.7 GHG emissions growth (mtCO2e) 5.9 5.1 2.6 1.8 2.0 2.6 Energy related GHG emissions (% of total) 41.3 43.0 43.6 43.7 43.9 44.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ FY23 estimates based on BBS provisional estimates. b/ Calculations based on SAR-POV harmonization, using 2022-HIES. Actual data: 2022. Nowcast: 2023. Forecasts are from 2024 to 2026. c/ Projections using microsimulation methodology. MPO 5 Apr 24 The economy has recovered from the shocks resulting from the pandemic and BHUTAN Key conditions and Russia’s invasion of Ukraine. The fiscal deficit declined as pandemic-related relief challenges measures were phased out and capital ex- penditures decreased. However, a major Table 1 2023 Annual real GDP growth has averaged national investment in cryptocurrency Population, million 0.8 7.5 percent since the 1980s, driven mining resulted in a decline in internation- GDP, current US$ billion 2.9 by the hydropower sector and in ser- al reserves and a widening of the current GDP per capita, current US$ 3707.1 vices, including tourism. Rapid eco- account deficit (CAD) to 34.3 percent of a 0.0 International poverty rate ($2.15) nomic growth has contributed to GDP in FY22/23. The government an- a 0.5 poverty reduction over the last two nounced plans to establish a Special Eco- Lower middle-income poverty rate ($3.65) a 8.4 decades. Extreme poverty based on nomic Zone known as the Gelephu megac- Upper middle-income poverty rate ($6.85) Gini index a 28.5 $2.15/day was eliminated by 2022. Less ity project, aiming to mobilize significant School enrollment, primary (% gross) b 103.8 than one percent of people live on less foreign investments. b 71.8 than $3.65/day international poverty The downside risks to the economic Life expectancy at birth, years line and 8.5 percent of people live outlook persist. Delays in hydropower Total GHG emissions (mtCO2e) -5.2 with less than $6.85/day. Poverty re- projects could affect fiscal and external Source: WDI, Macro Poverty Outlook, and official data. duced significantly in the last five balances. Delayed fiscal consolidation a/ Most recent value (2022), 2017 PPPs. b/ Most recent WDI value (2021). years, partly driven by growth in real and the materialization of financial sec- per capita consumption, social trans- tor contingent liabilities could further fers and increases in remittances. De- erode fiscal buffers. Rising and volatile clines were particularly salient in rural commodity prices due to geopolitical areas. Access to food, education, wa- tensions could exert further pressure on Output grew by 4.5 percent in FY22/23 ter, and sanitation also improved in the external balance. Continued emigra- and growth rate is projected to increase in the last five years. Inequality, mea- tion of skilled labor could also weigh on the medium term, due to recovery in in- sured by the Gini index, decreased the economy. dustry and services sectors. Fiscal deficit from 37 in 2017 to 28 in 2022. Howev- er, vulnerability to shocks and spatial is anticipated to increase in FY23/24 be- inequalities remain a challenge, with a fore moderating in the medium term. poverty rate as high as 41 percent in Recent developments Current account deficit is expected to im- Zhemgang district and as low as 1.5 prove with increased hydropower exports, percent in Thimphu district, while Gi- Real GDP is estimated to have grown tourism, and reduced crypto equipment ni is as high as 0.32 in Zhemgang and by 4.5 percent in FY22/23, supported by as low as 0.24 in Punakha and Thim- the reopening of borders for tourism. imports. In 2022, about 9 percent of the phu. Sluggish job creation with high The industry sector grew by 5.6 percent, population lived below $6.85/day but a youth unemployment rate (15.9 per- driven by construction, mining, and substantial share of Bhutanese is vulnera- cent in 2023) has prompted an increase manufacturing activities. The services ble to falling into poverty. in emigration and contributed to a loss sector grew by 4.9 percent, supported of skilled workforce. by transport- and trade-related services. FIGURE 1 Bhutan / Real GDP growth and contributions to FIGURE 2 Bhutan / Actual and projected poverty rates and real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 25 70 300000 20 60 250000 15 50 10 200000 5 40 150000 0 30 -5 100000 20 -10 50000 10 -15 2001 2006 2011 2016 2021 2026 0 0 Private cons. Gov. cons. GFCF 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Inventories Exports Imports International poverty rate Lower middle-income pov. rate GDP Upper middle-income pov. rate Real GDP pc Sources: National Account Statistics and National Statistics Bureau (NSB). Source: World Bank. Notes: see Table 2. MPO 6 Apr 24 Growth in agriculture has been mod- declined with the fall in crypto-related IT The fiscal deficit is projected to increase erate, primarily due to reduced crop equipment imports. Hydropower exports in FY23/24. Current expenditure is ex- production. Demand side growth was declined due to increased domestic con- pected to increase due to a major salary driven by non-hydro goods and ser- sumption, reflecting the higher electric- hike for public sector employees and cap- vices exports and private investment, ity needs for crypto-mining operations. ital expenditures are likely to remain ro- with potential positive effects on em- Gross international reserves stood at bust, but close monitoring of the expen- ployment and wages. US$533 million as of November 2023. diture will keep the fiscal deficit at 5 The headline inflation rose marginally since percent of GDP. The fiscal deficit is ex- March 2023 to reach 5.0 percent in December pected to decline beyond FY24/25, driven 2023. The pickup was driven by the increase by higher revenue from the Puna II hy- in food prices locally and rising prices in In- Outlook dropower plant and lower capital expen- dia. This is expected to have negative effects diture due to declining grants. Public on household consumption, particularly in The economy is projected to grow by 4.9 debt is expected to remain elevated at poor urban households. percent in FY23/24, supported by higher 110.9 percent of GDP in FY23/24. The fiscal deficit declined to 4.1 percent growth in tourism. Net trade is expected The CAD improved in the first quarter of of GDP in FY22/23, primarily due to re- to improve due to rising services exports FY23/24 and is expected to improve further duced capital spending. Although corpo- and a fall in crypto-related IT equipment to 15.7 percent of GDP in FY23/24 driven rate income taxes, driven by hydro rev- imports. Medium-term growth is expect- by a lower trade deficit. Export growth is enues, remained subdued, non-hydro rev- ed to be supported by the services sec- expected to be driven by hydro exports enues increased, reflecting the gradual re- tors and the commissioning of the Puna and services exports fuelled by increased covery of the industrial and services sec- II hydropower plant. The growth is ex- tourist arrivals. Conversely, the import of tors. Capital expenditure remained low in pected to improve household income and goods is expected to decrease, primarily FY22/23 due to frontloading of the 12th create new jobs. due to the decline in imports of crypto IT Five-Year Plan in FY20/21. The incidence of poverty is estimated to equipment, which constituted approxi- The current account deficit (CAD) decrease slightly to 7.8 percent in 2023 mately 6 percent of GDP in 2022. Inter- widened significantly to 34.3 percent of based on $6.85/day. However, a large national reserves are expected to decline GDP in FY22/23. Tourist inflow support- share of the population will remain vul- by US$63 million since FY22/23 to US$516 ed export services growth, and imports nerable to falling into poverty. million in FY23/24 (3.8 months of import). TABLE 2 Bhutan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2020/21 2021/22 2022/23e 2023/24f 2024/25f 2025/26f a Real GDP growth, at constant market prices -3.3 4.8 4.6 4.9 5.7 6.0 Private consumption 0.3 1.5 2.9 2.0 2.2 2.3 Government consumption 5.4 1.9 -1.2 0.5 0.9 1.4 Gross fixed capital investment -3.4 25.4 13.3 -0.5 0.4 3.2 Exports, goods and services -10.4 -3.6 3.7 7.7 9.3 9.7 Imports, goods and services -0.5 13.2 8.9 -4.0 -3.9 -1.0 Real GDP growth, at constant factor prices -2.3 4.9 4.6 4.9 5.7 6.0 Agriculture 2.7 0.1 0.3 1.7 1.6 1.7 Industry -5.9 4.8 5.6 5.0 9.1 9.6 Services -1.2 6.3 5.0 5.6 4.7 4.7 Inflation (consumer price index) 8.2 5.3 4.6 4.9 4.1 4.0 Current account balance (% of GDP) -11.1 -28.1 -34.3 -15.7 -9.7 -9.6 Fiscal balance (% of GDP) -5.8 -7.0 -4.1 -5.0 -3.5 -2.2 Revenues (% of GDP) 30.9 25.1 25.2 24.6 25.1 24.1 Debt (% of GDP) 123.3 118.8 116.5 110.9 103.4 112.0 Primary balance (% of GDP) -4.8 -5.6 -2.4 -3.8 -2.0 -0.3 b,c International poverty rate ($2.15 in 2017 PPP) .. 0.0 .. .. .. .. b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) .. 0.5 0.4 0.3 0.3 0.2 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) .. 8.4 7.8 7.0 6.3 5.3 GHG emissions growth (mtCO2e) 0.1 -1.2 -1.5 -1.4 -1.4 -1.4 Energy related GHG emissions (% of total) -14.6 -15.3 -16.4 -17.3 -18.3 -19.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ The GDP estimates in the AM23 MPO reflect the base year 2000. The National Statistics Bureau has recently updated the base year from 2000 to 2017. The SM24 MPO will reflect the rebased NIA estimates for 2017 to 2022. b/ Calculations based on SAR-POV harmonization, using 2022-BLSS. Actual data: 2022. Nowcast: 2023. Forecasts are from 2024 to 2026. c/ Projection using neutral distribution (2022) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. MPO 7 Apr 24 work increased, albeit raising concerns about the quality and sustainability of INDIA Key conditions and these improvements. Risks to the growth and poverty reduc- challenges tion outlook are balanced. Global growth has remained subdued; there are signs of Table 1 2023 Between 2000 and 2019, India’s economy recovery, although geopolitical tensions Population, million 1428.6 grew by 6.6 percent annually on average; could cause supply chain disruptions. In- GDP, current US$ billion 3610.5 per capita GDP doubled, and the extreme dian manufacturing firms have benefited GDP per capita, current US$ 2527.2 poverty rate decreased from 40 percent from lower input costs as global com- a 108.1 School enrollment, primary (% gross) in 2004 to 13.2 percent in 2019. Non- modity prices eased. While not immune a 67.2 monetary poverty (deprivation in health, to international developments, India’s Life expectancy at birth, years Total GHG emissions (mtCO2e) 3620.1 education, and living standards) fell by economy is resilient with its vast domes- Source: WDI, Macro Poverty Outlook, and official data. 70 percent from 2005-06 to 16.4 percent tic market, diversified structure, and sub- a/ WDI for School enrollment (2022); Life expectancy in 2019-21. These developments were un- stantial foreign exchange reserves provid- (2021). derpinned by India’s deeper integration ing external buffers. Achieving higher into the global economy, improvements growth would require enhancing the ef- in the business environment, basic ser- ficiency of public investment in human vices expansion, and prudent macroeco- capital, addressing constraints to the par- Buoyant construction, manufacturing, nomic management. However, inequality ticipation of women in the labor market, persisted, with a consumption-based Gini further deepening the transition to green and services drove strong growth in In- index of 33 percent, and around 44 per- energy, expanding infrastructure, and dia in FY23/24 and will continue to an- cent of the population lived below the easing trade, investment, job creation, and chor growth at high levels over the lower middle-income poverty line in doing business more generally through medium term despite the muted global FY21/22. Regional disparities in non-mon- the next generation regulatory reforms. outlook. In recent years, high growth etary poverty and access to basic services remain largely unchanged. and recovery in the labor market have The economy contracted by 5.8 percent in been accompanied by declining rates of FY20/21, due to COVID-19 related mobil- Recent developments extreme and moderate poverty, and im- ity restrictions, before rebounding by 9.7 provements in non-monetary poverty. percent in FY21/22 to above its pre-pan- Growth is projected to reach 7.5 percent demic level. Over the same period extreme in FY23/24. Buoyant services and indus- Critical structural reforms for sustained poverty spiked temporarily to 15.5 percent try activity, especially in construction development include promoting trade before dropping to 13 percent. Labor mar- and manufacturing, offset a slowdown in and private investments, improving the ket outcomes improved notably in FY22/ agriculture due to uneven monsoons. In- business climate, supporting the catch- 23, with the urban unemployment rate de- vestment is projected to grow by 10.8 up growth of lagging states, and creat- creasing to 7.2 percent in FY22/23 from 9.8 percent, fueled by significant public in- percent in FY21/22. The labor force par- frastructure spending and increased pri- ing conditions for more and better jobs, ticipation rate improved, particularly for vate investment. Private consumption is particularly for the youth and women. women, as self-employment and unpaid forecast to moderate as weak agriculture FIGURE 1 India / Real GDP growth and contributions to real FIGURE 2 India / Actual poverty rates and real GDP per capita GDP growth at factor cost Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 12 80 120000 Forecast 70 100000 8 60 80000 50 4 40 60000 30 0 40000 20 20000 Services 10 -4 Industry 0 0 Agriculture Real GDP growth, at constant factor prices 2009 2011 2013 2015 2017 2019 2021 -8 International poverty rate Lower middle-income pov. rate FY16/17 FY18/19 FY20/21 FY22/23 FY24/25 FY26/27 Real GDP pc Sources: National Statistics Office (NSO) and World Bank. Source: World Bank. Notes: see Table 2. Note: FY14/15 refers to the fiscal year 2014-15 (April 2014-March 2015) and so on. MPO 8 Apr 24 performance depressed rural incomes and deficit, the debt-to-GDP ratio is expected will be supported by the recovery of agri- post-pandemic pent-up demand waned. to rise from 82.5 in FY22/23 to 84.3 per- culture and declining inflation. Under the Inflation is expected to fall to 5.5 percent cent in FY23/24 as nominal growth was baseline scenario, headline inflation is in FY23/24. Core inflation fell below 4 per- significantly lower in FY23/24 at 9.2 per- projected to decline to 4 percent over cent, while food inflation remained around cent from 14.2 percent in FY22/23. the medium term. These developments 8 percent as of February 2024. The RBI's The current account deficit is expected to are expected to be accompanied by fur- Monetary Policy Committee maintained narrow to 1.1 percent of GDP in FY23/24, ther reductions in extreme and moderate the policy rate unchanged at 6.5 percent from 2.0 percent in the previous year. poverty. New official data on household and its "withdrawal of accommodation" Strong services exports and declining in- expenditures from 2022/23 and 2023/24 stance. The sustainability of poverty re- ternational fuel prices drove the improve- household surveys will allow to reassess duction and consumption spending by ment. Net Foreign Direct Investment is es- poverty and inequality rates. poorer households are constrained by timated to remain subdued at 0.8 percent The overall fiscal deficit is projected to nar- weak agriculture, stagnant real wages for of GDP as repatriation surged, but foreign row, helping to gradually reduce public casual labor, food price volatility, and bet- portfolio inflows rebounded in FY23/24. debt. Revenues are projected to remain ro- ter utilization of social schemes like PM Thus, international reserves rose to US$622 bust, thanks to improving tax administra- Awas Yojna and PM Ayushman Bharat can billion as of February 2024, amounting to tion and healthy corporate profits. Current help sustain the achievement. around 10 months of import cover. spending should continue to increase in The fiscal deficit is expected to narrow to absolute terms but decline as a share of 8.6 percent of GDP in FY23/24 from 9.1 GDP, with capital spending remaining percent in FY22/23. At the central level, high (at over 5 percent of GDP). The debt- gross tax revenues increased by 12.5 per- Outlook to-GDP ratio is projected to decline gradu- cent in FY23/24, surpassing the 10.5 per- ally to around 81 percent by FY26/27. cent budget target, thanks to continued Growth is expected to decelerate to 6.6 The current account deficit is expected to efforts to broaden the base and improve percent in FY24/25, before picking up in remain at around 1.5 percent of GDP over tax services. Non-tax revenues were subsequent years. Growth will be damp- the forecast period supported by declining buoyed by higher-than-expected divi- ened in FY24/25 by the subdued external commodity prices, vibrant services ex- dends from the RBI and other financial environment, the unwinding of the post- ports, and continued progress in high and institutions. Current expenditure grew by COVID-19 rebound, and the general medium-technology goods exports. The 2.5 percent y-o-y, allowing a sizeable ex- slowdown of activity, particularly capex, deficit should be adequately financed by pansion of public investment by 28 per- during the election period. The medium- foreign (direct and portfolio) investment cent. The aggregate fiscal deficit of states term outlook is positive as past public in- flows, with foreign exchange reserves pro- increased to 2.8 percent from 2.7 percent vestment will crowd-in corporate invest- viding ample cover against any adverse in FY22/23. Despite a lower overall ment, and private consumption growth external development. TABLE 2 India / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021/22 2022/23 2023/24e 2024/25f 2025/26f 2026/27f Real GDP growth, at constant market prices 9.7 7.0 7.5 6.6 6.7 6.8 Private consumption 11.7 6.8 3.8 5.1 6.3 6.8 Government consumption 0.0 9.0 3.1 5.8 5.9 6.1 Gross fixed capital investment 17.5 6.6 10.8 9.7 7.6 7.4 Exports, goods and services 29.6 13.4 3.1 4.5 7.2 8.2 Imports, goods and services 22.1 10.6 10.4 4.9 7.1 8.5 Real GDP growth, at constant factor prices 9.4 6.7 6.8 6.6 6.7 6.8 Agriculture 4.6 4.7 0.7 2.1 3.7 4.0 Industry 12.2 2.1 8.8 7.6 7.1 7.1 Services 9.2 10.0 7.4 7.3 7.3 7.3 Inflation (consumer price index) 5.5 6.7 5.5 4.7 4.1 4.0 Current account balance (% of GDP) -1.2 -2.0 -1.1 -1.4 -1.5 -1.5 Net foreign direct investment inflow (% of GDP) 1.2 0.8 0.8 1.2 1.4 1.5 Fiscal balance (% of GDP) -9.5 -9.1 -8.6 -8.0 -7.5 -7.4 Revenues (% of GDP) 20.6 19.2 19.6 20.2 20.4 20.4 Debt (% of GDP) 84.8 82.5 84.2 83.1 81.8 80.6 Primary balance (% of GDP) -4.2 -3.9 -3.4 -2.8 -2.4 -2.3 a International poverty rate ($2.15 in 2017 PPP) 12.9 .. .. .. .. .. a Lower middle-income poverty rate ($3.65 in 2017 PPP) 44.1 .. .. .. .. .. GHG emissions growth (mtCO2e) 6.2 5.0 2.5 4.2 3.1 3.2 Energy related GHG emissions (% of total) 69.1 70.3 70.9 71.9 72.7 73.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Estimates based on World Bank Poverty and Inequality Platform. Ministry of Statistics and Programme Implementation (MOSPI) has recently released a Factsheet on the 2022/23 Household Consumption Expenditure Survey. The survey is part 1 of a two-year consecutive survey effort (2022-23 and 2023-24) that should fill a long gap in official poverty statistics in India. The official poverty numbers for 2022-23 will be available when the microdata is released. MPO 9 Apr 24 guarantees. The rising cost of external bor- rowing has also forced the government to MALDIVES Key conditions and turn towards domestic financing sources, increasing the exposure of the monetary challenges and financial sector to the sovereign. As a positive step, the government recently Table 1 2023 Tourism, which directly accounts for a announced its commitment to a fiscal re- Population, million 0.5 quarter of the economy, has continued to form agenda that aims to address econom- GDP, current US$ billion 6.6 expand driven by arrivals from Russia, In- ic vulnerabilities. Details of this agenda GDP per capita, current US$ 12624.9 dia, and China, as well as new markets still need to be released but will likely in- a 3.9 Upper middle-income poverty rate ($6.85) such as the USA. However, a decline in clude reforms to subsidies, SOEs, the pub- a 29.3 the average duration of stay and lower per lic health insurance (Aasandha) scheme, Gini index b 97.8 capita tourist spending has led to slower and capital spending. Revenues saved School enrollment, primary (% gross) Life expectancy at birth, years b 79.9 economic growth in 2023. could be partially recycled to mitigate Total GHG emissions (mtCO2e) 2.7 Following substantial increases in public poverty and inequality increases. Without spending in recent years, economic imbal- a meaningful fiscal adjustment, public and Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2019), 2017 PPPs. ances and vulnerabilities have reached publicly guaranteed (PPG) debt is forecast b/ WDI for School enrollment (2020); Life expectancy critical levels in the Maldives. Persistent to remain high. (2021). large current account and fiscal deficits have depleted external buffers. With a heavy reliance on imports, the nation faces significant external and fiscal pressures Recent developments Economic growth is slowing, despite ris- due to substantial level of construction-re- ing tourist arrivals. Large external im- lated imports, and limited official reserves. Tourist arrivals climbed by 12 percent (y- Pressure on public finances is exacerbated o-y) and reached 1.88 million in 2023, an balances, combined with external financ- by government support for underperform- all-time high. However, this did not trans- ing gaps have led to declining foreign ing State-Owned Enterprises (SOEs), blan- late into higher GDP growth due to de- exchange reserves and substantial liq- ket provision of subsidies, continued high creased spending per tourist linked to a uidity pressures. These add to solvency levels of capital spending, and a generous growing preference for guest houses over public health scheme. Hard-to-sustain sub- high-end resorts. Real GDP grew by only concerns that reflect a high public debt sidies and in-kind transfers play a vital 2.5 percent (y-o-y) on a 4-quarter rolling stock, large fiscal deficits, and expendi- role in boosting household incomes, par- basis in 2023Q3, as the tourism and trade ture arrears. Sustaining macroeconomic ticularly among the economically disad- sectors contracted by, respectively, 0.4 and stability and growth will require a ma- vantaged and those living in the atolls, 0.9 percent (y-o-y) in the quarter. Overall, jor fiscal adjustment and implementa- raising concerns about the welfare impact the Maldivian economy is estimated to of fiscal vulnerabilities. have grown by 4.0 percent in 2023. tion of a multi-year reform plan. Pro- While infrastructure projects have boost- Compared to its historical average of 0.5 tecting the poor and vulnerable from in- ed long-term growth prospects, they percent, domestic inflation remained ele- come and welfare losses will be crucial. have largely been financed from external vated at 2.9 percent (y-o-y) in 2023, giv- non-concessional sources and sovereign en high global commodity prices and FIGURE 1 Maldives / Real GDP growth and contributions to FIGURE 2 Maldives / Actual and projected poverty rates real GDP growth and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 50 60 250000 Fisheries Construction Wholesale and retail trade 50 40 200000 Tourism Transp. and comm. Real Estate 40 30 Public administration 150000 Others 30 20 GDP 100000 20 10 50000 10 0 0 0 2009 2011 2013 2015 2017 2019 2021 2023 2025 -10 International poverty rate Lower middle-income pov. rate 2021-Q3 2022-Q1 2022-Q3 2023-Q1 2023-Q3 Upper middle-income pov. rate Real GDP pc Sources: Maldives Bureau of Statistics and World Bank estimates. Source: World Bank. Notes: see Table 2. MPO 10 Apr 24 a fiscally prudent increase in the goods the planned removal of blanket subsidies. and services tax (GST) rate. Price increas- In the absence of mitigation, this could dri- es were particularly acute in the food, ed- Outlook ve poverty to increase by 2.5 percentage ucation, and restaurant and accommoda- points. Higher prices could impact the la- tion services sectors. The poverty impact Supported by tourism, the economy is pro- bor market and increase existing inequali- of food inflation alone could be 0.4 per- jected to grow by 4.7 percent on average ties in employment opportunities. centage points, and higher in atolls (0.6 over the medium term – significantly low- The current account deficit is expected percentage points). er than the pre-pandemic average of 7.4 to remain elevated given commodity Travel export receipts contracted by 6.8 percent. This outlook is predicated on a price pressures and continued capital percent (y-o-y) in 2023, while merchandise significant expected fiscal adjustment – in- imports to complete ongoing and imports remained elevated at US$3.5 bil- cluding the negative impact on real house- planned infrastructure projects. Rising lion, driven by high commodity and capi- hold incomes from the planned subsidy re- external financing needs – including tal goods imports. As a result, the current forms and a reduction in government con- debt servicing – are expected to sustain account deficit widened considerably to an sumption and investments – and more pressure on official reserves. estimated 23.4 percent of GDP. High im- moderate tourist spending. Slower project- Major downside risks exist. Any shock to port costs and external debt repayments ed growth also translates into slowing the tourism sector could threaten the al- also put significant pressure on gross re- poverty reduction in 2024. ready modest levels of projected econom- serves, which fell to US$551.1 million (1.9 The fiscal deficit is expected to remain el- ic growth and lead to larger welfare loss- months of imports) in January 2024, from evated in 2024, as the approved Budget es. Limited domestic and external financ- US$790.0 million a year earlier. includes ambitious spending plans with ing may further exacerbate liquidity and Failure to implement planned subsidy re- an unidentified financing gap of over solvency risks, especially considering the forms and rapidly rising recurrent and US$700 million. As a result, PPG debt is approaching spike in external debt servic- capital spending led to a sharp rise in projected to remain around 120 percent of ing payments. A further widening of the overall expenditure and an increase in GDP over the medium term. A fiscal re- current account deficit could exacerbate the fiscal deficit to an estimated 13.2 per- form package was announced, but a larg- external vulnerabilities. Sustaining macro- cent of GDP in 2023. This was despite er fiscal adjustment is required – particu- economic stability will require a major raising GST rates, which resulted in over- larly through higher cuts in non-essential fiscal adjustment and the implementation all revenues growing by 17 percent (y-o- capital and untargeted recurrent spend- of a multi-year reform plan which needs y). A supplementary budget (6.1 percent ing – to lower public debt and substan- to be accompanied by targeted transfer of GDP) was approved to cover rapidly tially address fiscal and external vulnera- mechanism to offset welfare losses among rising expenditure. bilities. Inflation is projected to rise due to vulnerable groups. TABLE 2 Maldives / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 37.7 13.9 4.0 4.7 5.2 4.1 Real GDP growth, at constant factor prices 33.8 15.0 4.0 4.7 5.2 4.1 Agriculture -0.7 3.1 3.2 3.0 2.8 2.7 Industry -4.6 25.2 8.5 2.0 4.7 1.8 Services 43.4 14.7 3.5 5.1 5.4 4.5 Inflation (consumer price index) 0.5 2.3 2.9 7.5 6.5 5.0 Current account balance (% of GDP) -8.7 -16.7 -23.4 -19.4 -18.0 -14.3 Net foreign direct investment inflow (% of GDP) 12.2 11.9 12.1 11.7 12.3 11.5 Fiscal balance (% of GDP) -14.2 -12.0 -13.2 -12.2 -11.0 -9.5 Revenues (% of GDP) 26.4 30.0 33.0 31.8 31.5 31.9 Debt (% of GDP) 117.1 114.5 122.9 122.1 119.7 118.4 Primary balance (% of GDP) -11.6 -8.3 -9.6 -8.3 -7.2 -6.0 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 6.7 4.5 3.9 3.7 2.9 2.8 GHG emissions growth (mtCO2e) 11.1 13.8 8.9 6.6 6.0 5.9 Energy related GHG emissions (% of total) 74.7 77.0 78.1 78.8 79.4 79.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on SAR-POV harmonization, using 2019-HIES. Actual data: 2019. Nowcast: 2020-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2019) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 11 Apr 24 The incidence of poverty varies across the seven provinces of Nepal, reflecting spa- NEPAL Key conditions and tial disparities across the country. Limited job opportunities are another challenges characteristic of Nepal’s economy. Con- sequently, emigration remains a pre- Table 1 2023 Nepal’s economy experienced an average ferred option for Nepalis across the in- Population, million 30.9 growth rate of 4.5 percent over the past come distribution, with poorer house- GDP, current US$ billion 41.2 decade, punctuated by four significant ex- holds benefiting increasingly more from GDP per capita, current US$ 1332.2 ternal shocks in 2015 (earthquake), 2016 remittances over the past decade. On a 8.2 International poverty rate ($2.15) (India blockade), 2017 (landslide), and average, migrant workers earned three a 40.0 2020 (COVID-19). Remittances, account- times more than domestic workers. Self- Lower middle-income poverty rate ($3.65) a 80.4 ing for approximately one-quarter of the employment or unpaid work comprised Upper middle-income poverty rate ($6.85) Gini index a 32.8 country's GDP for a decade, have driven a third of all employment in FY23, School enrollment, primary (% gross) b 118.8 private consumption. The new household while over half of those with secondary b 68.4 survey data shows a 66 percent increase education and a quarter with tertiary Life expectancy at birth, years in average real per capita consumption education were unemployed. Total GHG emissions (mtCO2e) 49.2 between FY11 and FY23, alongside a sig- Source: WDI, Macro Poverty Outlook, and official data. nificant decline in the poverty rate by 21.6 a/ Most recent value (2010), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy percentage points to 3.6 percent over the (2021). same period (based on the 2011 national Recent developments poverty line). Remittances were a major factor in poverty reduction, contributing After a 1.9 percent growth in FY23, high- GDP growth is projected to increase from an estimated 32 percent. frequency indicators show improvement 1.9 percent in FY23 to 3.3 percent in Despite these positive developments and in growth in the first half of FY24 achieving lower-middle-income country (H1FY24) compared to H1FY23. Indus- FY24, driven by revived tourism and im- status in FY20, Nepal’s per capita income trial growth benefited from higher hy- proved electricity generation. Decreased level still lags its peer countries. Persis- dropower generation, while services saw expenditure is anticipated to trim the fis- tent challenges such as low productivity gains from a 46.8 percent (year-on-year) cal deficit, while a current account sur- and fiscal pressures from the transition to increase in tourism arrivals. Agriculture fiscal federalism impede progress. Slug- grew due to increased paddy production. plus is expected due to reduced merchan- gish private sector growth, geographic However, weak domestic demand per- dise imports and increased remittances. and environmental challenges, weak in- sists despite a 1 percentage point policy Monetary easing could also support ternational competitiveness, and gover- interest rate cut in December 2023. medium-term growth. Despite significant nance issues pose further obstacles. Al- Average inflation cooled to 6.5 percent in reduction in poverty over the past decade, though both the inequality and prosperi- H1FY24 from 8 percent in H1FY23, driven ty gap have decreased, about 20.3 percent by an easing in prices of transportation concerns persist over vulnerability to re- and housing and utilities. However, infla- of the population still live below the new lapse and short-term risks such as high national poverty line, which is 70 percent tion expectations appear persistent, and inflation and other shocks. higher than the 2011 poverty threshold. poor households may face rising prices FIGURE 1 Nepal / Real GDP levels: Actual vs. pre-covid trend FIGURE 2 Nepal / Current account deficit Index of real GDP, FY19=100 Percent of GDP 160 15 Pre-covid 5 year GDP trend 10 140 Actual GDP 5 120 0 100 -5 -10 80 -15 60 -20 H1FY19 H1FY20 H1FY21 H1FY22 H1FY23 H1FY24 40 Workers' remittances Balance of goods and services FY12 FY14 FY16 FY18 FY20 FY22 FY24 FY26 Current account balance Sources: World Bank staff calculations and Nepal National Statistics Office. Sources: World Bank staff calculations and Nepal Rastra Bank. MPO 12 Apr 24 due to increased shipping costs from Red FY25-FY26, supported by monetary policy is also forecast to decline driven by lower Sea supply disruptions. easing. The services sector is expected to capital spending, as well as reduced fiscal The current account balance turned from remain the primary driver of real GDP transfers to subnational governments and a deficit in FY23 to a surplus in H1FY24, growth and job creation over the medium administrative spending. The overall fiscal the first time since H1FY16. This was sup- term. However, most service sector jobs re- deficit is projected to narrow to 3.1 percent ported by (a) strong remittance inflows, main low productivity and informal. In- of GDP in FY24. Buoyed by strong GDP which grew by 22.6 percent year-on-year, dustrial growth, particularly in the elec- and merchandise imports growth, rev- and (b) declining imports of food, bever- tricity sub-sector, is projected to strength- enues are expected to expand over the ages, and industrial supplies, which nar- en due to significant additions in hydro- medium term. Public investment is also ex- rowed the trade deficit. Additionally, ex- electric capacity, which could boost pro- pected to rise post-FY24, supported by the ports increased due to higher earnings ductivity. The economy could also benefit implementation of the National Project from tourism. Consequently, official for- in the medium term from increased private Bank. The fiscal deficit is projected to fur- eign exchange reserves grew and reached investment if reforms are implemented to ther narrow in FY25 and FY26. This would 12.1 months of import cover by the end improve the business environment. stabilize the debt below 41 percent of GDP of H1FY24. Consumer price inflation is expected to by the end of FY26. The fiscal deficit widened to 6.2 percent of remain elevated in FY24 compared to the The forecast is subject to both domestic GDP in FY23, driven by lower revenues FY17-23 average, increasing short-term and external risks. Externally, geopolit- owing to import restrictions. However, the poverty and vulnerability risks, before ical uncertainty may lead to a rebound deficit declined in H1FY24, reflecting im- gradually declining, reflecting modera- in international commodity prices, af- provement in income tax collections fol- tion in global commodity prices and lower fecting all sectors. A slowdown in part- lowing provisions in the FY24 budget re- inflation expectations. ner countries could reduce remittance quiring banks and financial institutions to The current account balance is projected inflows and tourism, hindering growth pay income tax on profits received through to turn into a surplus in FY24, the first and poverty reduction progress. In addi- mergers or acquisitions and issuance of since FY16, due to robust remittances tion, the social protection programs are Further Public Offerings at a premium growth and lower merchandise imports. largely untargeted, have limited reach rate, and a decrease in expenditure, partly The surplus will narrow in subsequent among the poor, and lack shock respon- due to lower capital budget execution and years as import growth outpaces that of siveness. This poses fiscal risks and hin- austerity measures. exports. While electricity exports are set ders social program effectiveness. These to continue, the recent surge in remit- pressures, along with a weak domestic tances, from record migration in FY23, is labor market, could further impact the projected to subside. poor and vulnerable population. Fur- Outlook Tax revenues are expected to decline fur- thermore, persistent inflation expecta- ther in FY24, despite some tax reforms, tions and lower domestic demand will Growth is projected to recover from 1.9 per- due to lower merchandise imports and weigh on the economy and the people. cent in FY23 to 3.3 percent in FY24, and fur- revenue loss from increases in electric ve- Natural disasters pose additional risks ther accelerate to an average of 5 percent in hicle imports at lower tax rates. Spending to sustaining welfare gains. TABLE 2 Nepal / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 4.8 5.6 1.9 3.3 4.6 5.3 Private consumption 8.0 6.8 4.1 3.5 3.7 3.7 Government consumption -1.7 9.6 -35.2 -16.5 9.2 9.3 Gross fixed capital investment 9.8 3.8 -10.9 -4.4 15.4 12.1 Exports, goods and services -21.3 34.1 5.5 5.4 12.5 14.7 Imports, goods and services 18.8 15.1 -17.2 -4.5 13.1 9.7 Real GDP growth, at constant factor prices 4.5 5.3 2.2 3.3 4.6 5.3 Agriculture 2.8 2.2 2.7 2.2 2.4 2.5 Industry 6.9 10.8 0.6 2.9 5.7 8.6 Services 4.7 5.3 2.3 4.0 5.4 5.8 Inflation (consumer price index) 3.6 6.3 7.7 6.7 6.0 5.5 Current account balance (% of GDP) -7.7 -12.6 -1.3 3.9 1.6 1.0 Net foreign direct investment inflow (% of GDP) 0.4 0.4 0.1 0.2 0.4 0.6 Fiscal balance (% of GDP) -4.0 -3.7 -6.2 -3.1 -2.8 -2.7 Revenues (% of GDP) 23.3 23.1 19.2 18.7 19.6 20.1 Debt (% of GDP) 39.9 40.8 42.7 42.5 41.7 40.8 Primary balance (% of GDP) -3.2 -2.7 -4.8 -1.7 -1.6 -1.7 GHG emissions growth (mtCO2e) 3.2 -0.5 -1.1 1.6 2.4 2.9 Energy related GHG emissions (% of total) 34.1 32.8 31.1 31.1 31.8 32.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 13 Apr 24 PAKISTAN Key conditions and Recent developments challenges After contracting for two consecutive quarters, real GDP at factor cost rose by Table 1 2023 Pakistan’s economy contracted by 0.2 2.1 percent y-o-y over July to September Population, million 240.5 percent in FY23 on surging world 2023 on strong agricultural growth and GDP, current US$ billion 338.4 commodity prices, global monetary some improvement in confidence. Agri- GDP per capita, current US$ 1407.0 tightening, catastrophic flooding, and cultural output expanded by 5.1 percent a 4.9 International poverty rate ($2.15) inadequate macroeconomic manage- in Q1 FY24, the highest quarterly growth a 39.8 ment (Figure 1). These headwinds on record, as conducive weather condi- Lower middle-income poverty rate ($3.65) a 84.5 led to pressures on domestic prices, tions led to strong yields. On easing im- Upper middle-income poverty rate ($6.85) Gini index a 29.6 external and fiscal accounts, the cur- port controls, the industry sector grew School enrollment, primary (% gross) b 84.4 rency, and foreign reserves. Import by 2.5 percent in Q1 FY24, the strongest b 66.1 and capital controls were conse- growth in five quarters, while service sec- Life expectancy at birth, years quently imposed, disrupting domes- tor output rose by 0.8 percent. However, Total GHG emissions (mtCO2e) 499.5 tic supply chains, fueling inflationary daily wages for unskilled labor, in which Source: WDI, Macro Poverty Outlook, and official data. pressures, and smothering economic most of the poor are engaged, grew by a/ Most recent value (2018), 2017 PPPs. b/ Most recent WDI value (2021). activity. In response to deteriorating just 5 percent in H1 FY24, much lower real wages and declining job quality, than inflation. Because of falling real poverty rose by 4.5 percentage points wages, growth did not translate into in FY23, with approximately 10 mil- poverty reduction. lion people just above the poverty Pakistan’s current account deficit (CAD) Despite some recovery, Pakistan’s econo- line at risk of poverty in the face of narrowed to US$0.8 billion in H1 FY24 my remains under stress with low for- shocks (Figure 2). from US$3.6 billion in H1 FY23, on im- eign reserves and high inflation. Policy New multilateral external financing port controls, reduced domestic demand, uncertainty remains elevated and eco- this year improved the foreign re- and lower global commodity prices. serve position and permitted the Meanwhile, official remittances fell by 6.8 nomic activity is subdued, reflecting easing of import controls. The econ- percent y-o-y in H1 FY24 due to exchange tight fiscal and monetary policy and im- omy has shown broad-based but rate rigidities earlier in the year. Fresh ex- port controls. Growth is projected to re- still nascent signs of a recovery. ternal inflows led to a balance of pay- main below potential with heightened Despite this, risks remain high, ments (BOP) surplus of US$3.0 billion. social vulnerability and limited poverty with the outlook predicated on the Consequently, international reserves in- IMF-SBA program remaining on creased to US$9.4 billion at the end of De- reduction in the medium term. Financial track, continued fiscal restraint, and cember 2023, equivalent to 1.7 months of sector risks, policy uncertainty, and additional external financing. Finan- imports. With the BOP surplus and regu- stronger external headwinds pose signif- cial sector risks, policy uncertainty, latory reforms in the forex market, the ru- icant risks to the outlook. and stronger external headwinds pee appreciated modestly against the U.S. pose significant risks. dollar over H1 FY24. FIGURE 1 Pakistan / Real GDP growth and sectoral FIGURE 2 Pakistan / Actual and projected poverty rates and contributions to real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 3 100 200000 90 180000 2 80 160000 1 70 140000 60 120000 0 50 100000 40 80000 -1 30 60000 -2 20 40000 Agriculture 10 20000 Industry -3 0 0 Services GDP 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 -4 International poverty rate Lower middle-income pov. rate Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Upper middle-income pov. rate Real GDP pc Sources: Pakistan Bureau of Statistics and World Bank staff calculations. Source: World Bank. Notes: see Table 2. MPO 14 Apr 24 Headline consumer price inflation rose to The estimated consolidation of the Public energy prices, with little respite for poor a multi-decade high of an average of 28.8 Sector Development Program in real terms and vulnerable households with depleted percent y-o-y in H1 FY24, up from 25.0 likely reduced public spending on con- savings and lower real incomes. With high percent in H1 FY23, reflecting higher do- struction, which employs many poor and base effects and lower projected global mestic energy prices and supply chain vulnerable. In addition, federal public pen- commodity prices, inflation is expected to disruptions, which in turn raised overall sions grew while Benazir Income Support moderate over the medium term. With production costs. Food inflation remained Programme (BISP) spending declined in continued import controls, the CAD is ex- high, particularly impacting poor and H1 FY24, contributing to rising inequality. pected to remain low at 0.7 percent of GDP vulnerable households who spend half in FY24 and to further narrow to 0.6 per- of their budgets on food, leading to in- cent of GDP in FY25 and FY26. flation inequality and increased food in- The fiscal deficit is projected to widen to security, especially in Sindh, Khyber Outlook 8.0 percent of GDP due to higher interest Pakhtunkhwa, and Balochistan. Trans- payments but gradually decline as fiscal portation costs rose faster in rural areas, Economic activity is expected to remain consolidation takes hold and interest pay- increasing the cost of accessing markets, subdued, with real GDP growth estimated ments fall over time. Fiscal consolidation schools, and health centers for the rural at 1.8 percent in FY24, reflecting continued will likely lead to continued high energy poor, potentially leading to children being tight macroeconomic policy, import con- inflation and restricted public spending on taken out of school and delayed medical trols, high inflation, and continued policy development and social sectors, which treatments as households cope with the uncertainty. Output growth is expected to may worsen monetary, welfare, and hu- rising cost of living. The policy rate was increase to around 2.5 percent over man development outcomes. While target- held at 22.0 percent, implying negative real FY25-26, remaining below potential. ed transfers are critical in protecting the interest rates throughout H1 FY24. Poverty reduction is projected to stall in poorest, the 20 percent increase in BISP With fiscal consolidation efforts, the pri- the medium term, owing to weak growth, cash transfers in H2 FY24 may not be mary fiscal surplus doubled to PKR1.8 tril- limited increase in real labor incomes, and enough. The macroeconomic outlook is lion in H1 FY24. Supported by higher di- persistently high food and energy infla- predicated on the successful completion of rect taxes and the petroleum development tion. Poverty is expected to remain close to the IMF-SBA program, continued fiscal re- levy hikes, total revenue rose more than 40 percent until FY26. straint, and external financing, but limited non-interest expenditure. The overall fiscal Inflation is projected to remain elevated at progress with major structural reforms deficit stood at PKR2.4 trillion for H1 FY24. 26.0 percent in FY24 due to higher domestic and continued policy uncertainty. TABLE 2 Pakistan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2020/21 2021/22 2022/23 2023/24e 2024/25f 2025/26f Real GDP growth, at constant market prices 6.5 4.8 0.0 1.8 2.3 2.7 Private consumption 9.4 7.1 2.4 1.7 2.2 2.5 Government consumption 1.8 -1.3 -4.9 0.9 1.4 2.0 Gross fixed capital investment 3.7 3.3 -16.3 -0.5 1.2 2.0 Exports, goods and services 6.5 5.9 2.4 2.1 3.2 3.7 Imports, goods and services 14.5 11.0 -0.3 0.3 1.2 1.6 Real GDP growth, at constant factor prices 5.8 6.2 -0.2 1.8 2.3 2.7 Agriculture 3.5 4.3 2.3 3.0 2.2 2.7 Industry 8.2 6.9 -3.8 1.8 2.2 2.4 Services 5.9 6.7 0.1 1.2 2.4 2.9 Inflation (consumer price index) 8.9 12.1 29.2 26.0 15.0 11.5 Current account balance (% of GDP) -0.8 -4.7 -0.7 -0.7 -0.6 -0.6 Net foreign direct investment inflow (% of GDP) 0.5 0.5 0.2 0.3 0.3 0.4 Fiscal balance, including grants (% of GDP) -6.0 -7.8 -7.7 -8.0 -7.4 -6.5 Revenues (% of GDP) 12.4 12.1 11.5 12.2 12.3 12.4 Debt (% of GDP) 77.6 80.7 81.4 73.1 72.3 72.5 Primary balance, including grants (% of GDP) -1.1 -3.1 -0.9 -0.1 -0.2 -0.2 a,b International poverty rate ($2.15 in 2017 PPP) 5.0 4.2 6.8 7.0 7.0 6.9 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 39.5 35.5 39.9 40.1 40.0 39.7 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 84.1 81.9 82.9 83.0 82.9 82.7 GHG emissions growth (mtCO2e) 5.2 5.2 1.5 3.4 3.5 3.7 Energy related GHG emissions (% of total) 43.7 44.5 43.5 43.6 43.7 43.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on SAR-POV harmonization, using 2018-HIES. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026. b/ Poverty projections based on microsimulations using 2018-HIES and aggregate macroeconomic indicators (see Caruso et al 2017). MPO 15 Apr 24 second review of the Extended Fund Fa- cility program. Key reforms focusing on SRI LANKA Key conditions and debt, fiscal management, trade, invest- ment, and State-Owned Enterprises challenges (SOEs) continue to advance. Table 1 2023 In 2022, Sri Lanka plunged into a severe Population, million 22.2 economic crisis, as longstanding structur- GDP, current US$ billion 84.4 al weaknesses were exacerbated by ex- Recent developments GDP per capita, current US$ 3792.8 ogenous shocks and policy mistakes. Af- a 1.0 International poverty rate ($2.15) ter losing access to international financial The economy contracted by 2.3 percent in a 11.3 markets in 2020, official reserves dropped 2023, despite growth in 3Q and 4Q (1.6 Lower middle-income poverty rate ($3.65) a 49.3 precipitously, and the forex liquidity con- and 4.5 percent, y-o-y, respectively) fol- Upper middle-income poverty rate ($6.85) Gini index a 37.7 straint led to severe shortages of essential lowing six quarters of contraction. This School enrollment, primary (% gross) b 96.9 goods. The country announced an exter- was driven by shrinking construction and b 76.4 nal debt service suspension in April 2022, mining, financial and IT services, and Life expectancy at birth, years pending debt restructuring. The economy textile manufacturing, amid weak de- Total GHG emissions (mtCO2e) 38.2 contracted by 9.5 percent in total during mand, tight private credit, and shortages Source: WDI, Macro Poverty Outlook, and official data. 2022 and 2023, and public and publicly of inputs, and was partly offset by a/ Most recent value (2019), 2017 PPPs. b/ Most recent WDI value (2021). guaranteed debt ballooned to 119.2 per- growth in transport, accommodation, cent of Gross Domestic Product (GDP) in food, and beverage services, resulting 2022 amid high inflation (46.4 percent, an- from a rebound in tourism. nual average in 2022) and a sharp cur- Inflation remained benign, after declining rency depreciation (81.2 percent, y-o-y, to single-digit levels in July 2023, sup- The economy has shown initial signs of 2022). Food insecurity and malnutrition ported by currency appreciation and im- stabilization with improved fiscal and ex- increased, poverty doubled, and inequal- proved supply. However, with the recent ternal balances, supported by a recovery ity widened. Approximately 60 percent spike in food prices and pass-through of in remittances and tourism and the con- of households experienced a decline in fuel and utility prices, headline inflation income due to reduced work hours or as measured by the Colombo Consumer tinued debt service suspension. However, job losses. The implementation of recent Price Index increased to 5.9 percent in this will be insufficient to reverse crisis- structural reforms, including cost-reflec- February 2024 (y-o-y). Labor force partici- induced welfare losses as poverty levels tive utility pricing and new revenue mea- pation declined (from 49.8 to 48.8 percent remain elevated. The narrow path to sures, helped macroeconomic stability but between 2022 and 3Q 2023), especially in restoring growth and prosperity will strained household budgets. Domestic urban areas. Households have adopted debt restructuring was completed in Sep- risky coping strategies to deal with low- hinge on a successful debt restructuring tember 2023, while negotiations with ex- er incomes and price pressures, including and continued reform implementation de- ternal creditors are progressing. In March using savings, taking on more debt, and spite the upcoming elections. 2024, a Staff Level Agreement was limiting their diets. Food insecurity rose reached between the authorities and In- during H2 2023, with 24 percent of house- ternational Monetary Fund staff on the holds being food insecure. FIGURE 1 Sri Lanka / Real GDP growth and contributions to FIGURE 2 Sri Lanka / Actual and projected poverty rates real GDP growth (production side) and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 6 80 700000 4 2 70 600000 0 60 -2 500000 -4 50 400000 -6 40 -8 300000 -10 30 -12 200000 20 -14 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 10 100000 Accommodation Construction 0 0 Net taxes Other services Transport & warehousing Other industries 2009 2011 2013 2015 2017 2019 2021 2023 2025 Textiles Agriculture International poverty rate Lower middle-income pov. rate Overall growth Upper middle-income pov. rate Real GDP pc Sources: Department of Census and Statistics and World Bank staff calculations. Source: World Bank. Notes: see Table 2. Notes: Accommodation includes food and beverage service activities and textiles include wearing apparel and leather-related products. MPO 16 Apr 24 After almost two years of monetary tight- to a high overall fiscal deficit in 2023. In- and gradual recovery in tourism and re- ening, the central bank cut policy rates by terest payments absorbed approximately mittances. Although the primary deficit is 650 basis points between June and Novem- three-fourths of revenue collected. expected to decline further, the overall fis- ber 2023. Combined with improvements in cal balance will remain high in 2024 due liquidity, this resulted in a sharp decline in to the large interest bill. Debt restructuring the government’s cost of domestic borrow- and continued fiscal consolidation are pro- ing. While y-o-y growth rates remain neg- Outlook jected to reduce the overall fiscal balance in ative, private sector credit has been recov- the medium term. ering monthly since June 2023. Growth prospects depend on progress While recent macroeconomic performance In 2023, the current account recorded with debt restructuring and the continued has been better than expected, downside a surplus for the first time since 1977, implementation of structural reforms. The risks remain high, given a narrow path as remittances and tourism rebounded primarily revenue-based fiscal adjustment to recovery and limited buffers. These sharply, and imports remained subdued. is, however, likely to further reduce dis- risks include a protracted or insufficiently The continued external debt service sus- posable incomes, weaken demand, and deep debt restructuring, reform fatigue pension, inflows from development weigh down growth in the short term. The or reversal following the elections, and a partners, large purchases of foreign ex- modest recovery will be insufficient to re- weaker recovery linked to scarring effects change, and postponed repayments on verse welfare losses experienced during from the crisis. With declining household existing credit lines have helped build the crisis, and poverty is estimated to re- expenditure on health and education, usable official reserves to about 2 main above 22 percent until 2026. concerns over the impact on future hu- months of imports (US$3.1 billion by Inflation is likely to rise moderately in the man capital remain high. Financial sector end-February 2024, compared to US$500 near-term, due to new revenue measures risks need to be carefully monitored as el- million in December 2022). The Rupee and the waning of favorable base effects, evated non-performing loans and signif- appreciated by 10.8 percent against the and remain benign in the medium term icant exposure to the sovereign contin- US Dollar in 2023. as demand continues to be subdued. Fur- ue to hinder financial sector stability and Despite the primary balance registering a ther increases could reverse the marginal impede credit intermediation. On the up- surplus (due to a significant increase in poverty reduction (1.1 percentage points) side, a strong and sustained implemen- revenue and the repayment of an on-lent expected in 2024. tation of the structural reform program, amount by an SOE), a sharp rise in interest The current account is projected to remain could boost confidence and attract fresh payments is estimated to have contributed in surplus, with subdued import growth capital inflows. TABLE 2 Sri Lanka / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f a Real GDP growth, at constant market prices 4.2 -7.3 -2.3 2.2 2.5 3.0 Private consumption 2.6 -9.0 -3.2 2.4 2.6 3.1 Government consumption -2.8 1.4 -2.7 -0.3 0.2 1.3 Gross fixed capital investment 6.3 -22.8 -9.1 3.3 3.1 3.9 Exports, goods and services 10.1 10.2 1.8 2.6 2.7 3.1 Imports, goods and services 4.1 -19.9 -2.7 2.3 1.6 2.3 a Real GDP growth, at constant factor prices 3.9 -7.0 -2.6 2.2 2.5 3.0 Agriculture 1.0 -4.2 2.6 1.5 1.5 1.5 Industry 5.7 -16.0 -9.2 2.6 2.7 2.9 Services 3.4 -2.6 -0.2 2.1 2.5 3.3 Inflation (consumer price index) 6.0 46.4 17.4 7.8 6.4 5.6 Current account balance (% of GDP) -3.7 -2.0 1.6 0.7 -0.2 -0.4 Net foreign direct investment inflow (% of GDP) 0.7 1.2 0.7 0.8 0.8 0.9 b,c International poverty rate ($2.15 in 2017 PPP) 1.5 4.1 5.2 4.7 4.1 3.8 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) 13.1 22.7 25.9 24.8 23.2 22.2 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) 51.2 64.4 66.6 65.8 65.6 64.4 GHG emissions growth (mtCO2e) 9.1 -3.0 -2.1 3.5 3.3 3.7 Energy related GHG emissions (% of total) 62.9 62.3 61.6 62.7 64.0 65.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Components of GDP by expenditure for 2020-2022 are estimates, as the data published on March 15, 2024, by authorities only included GDP by production. b/ Calculations based on SAR-POV harmonization, using 2019-HIES. Actual data: 2019. Microsimulation that models sectoral GDP growth rates, inflation, remittances, employ- ment, and cash transfers 2020-2022. Nowcast and forecast (2023-2026) use nominal GDP growth rates by sector and CPI inflation for food and non-food items. c/ Projection using neutral distribution (2019) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 17 Apr 24 Macro Poverty Outlook 04 / 2024