South Asia Macro Poverty Outlook Country-by-country Analysis and Projections for the Developing World Annual Meetings 2023 © 2023 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. Any 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 Annual Meetings 2023 Afghanistan Maldives Bangladesh Nepal Bhutan Pakistan India Sri Lanka MPO 1 Oct 23 Afghan households’ self-reported welfare and food security. According to recent AFGHANISTAN Key conditions and (April-June 2023) estimates, monetary poverty is at 48.3 percent, a 4-percentage challenges point decline compared to the same pe- riod in 2020, driven by the reduction in Following a notable contraction after the rural poverty. Afghan households have ITA’s ascendancy to power, international coped with the crisis by increasing the aid (US$ 3.5-4.0 billion in 2022) and im- labor supply, particularly youth and Following the Interim Taliban Adminis- proved security halted the steep economic women. Female labor force participation tration's (ITA) takeover, the economy decline from mid-2022. The exchange rate saw a threefold increase compared to stabilized, international trade recovered, 2020, with women primarily engaged in shrank by 20.7 percent and 6.2 percent in and the government could collect revenues home production (garment and food pro- 2021 and 2022, respectively. The new and pay public employees' salaries. Still, cessing). Overall, the growth in labor sup- low-level equilibrium, supported by inter- the economy remains fragile, with signifi- ply has sizably outpaced a slacking de- national aid, is delicate and vulnerable to cant challenges. The formal financial sector mand, resulting in a doubling of unem- disruptions. The ITA has demonstrated remains constricted, and most payments ployment and a one-quarter increase in rely on the informal Hawala system. With underemployment, as proxied by the its ability to collect revenues and increase the constant pressure of sustained popula- share of workers employed for less than international trade. Supply constraints tion growth and the economy missing pre- 40 hours per week. have eased, reducing headline inflation vious (external) growth drivers, high un- Afghanistan's exports have surged in val- steeply from its peak in July 2022, leading employment and underemployment ue, but the economy still runs a substantial plague the labor market. Moreover, with trade deficit. Afghanistan's exports to deflation since April 2023. Despite a nearly half of the population living in reached US$1.9 billion in 2022, driven by general improvement in household wel- poverty and the rest vulnerable, private food, coal, and textiles, which accounted fare over the last year, poverty still affects consumption remains constrained. for 94 percent. While exports grew three half of Afghanistan’s population, and As international aid decreases, the low- percent in the first seven months of 2023 level equilibrium sustained since the compared to the same period in 2022, high levels of unemployment and under- summer of 2022 faces substantial down- monthly export data indicates a decline in employment persist. The banking sector is side risks. To ensure long-term sustain- trend since February 2023 due to a de- struggling, and the payment system re- ability, the country must strengthen its crease in coal exports. Imports in 2022 ac- mains largely dysfunctional. human capital stock, improve social pro- counted for US$6.3 billion. For the first tection, sustain basic services, and ad- seven months of 2023, imports reached dress climate vulnerabilities. Harmful US$4.4 billion, marking a 32 percent in- gender policies by the ITA will hamper crease from the same period in 2022. Food, growth. The country is also ill-prepared minerals, and textiles composed more than to face climate challenges, and large seg- half of imports. The trade deficit for Jan-Ju- ments of people’s livelihood, mainly in ly 2023 was US$3.5 billion, higher than the rural areas, remain vulnerable to weather US$ 2.4 billion deficit in Jan-July 2022. shocks. Leveraging the comparative ad- Between January and August 24, 2023, vantage in the agriculture and mining Afghani (AFN) appreciated against the sectors will be critical for livelihoods, job US dollar (7.3 percent), Chinese yuan (6.0 creation, and future growth. percent), and Pakistan rupee (29.3 per- cent). The AFN appreciated due to lim- ited domestic money supply, higher re- mittances, and UN shipments of US dol- Recent developments lars and other inflows. In 2023, the UN brought in approximately US$1.12 billion Following the August 2021 political up- in addition to US$1.8 billion in 2022. In- heaval, headline inflation surged due to terestingly, the cash shipments and remit- supply disruptions and shocks to global tance inflows do not fully explain the fi- commodity prices despite reduced domes- nancing for the trade deficit. The foreign tic demand. After reaching 18.2 percent exchange market seems balanced, with no year-on-year in July 2022, prices dropped evidence of a parallel exchange market, sharply, resulting in deflation since April suggesting significant unidentified exter- 2023. By July 2023, year-on-year inflation nal inflows filling the gap. stands at -9.1 percent, driven by year-on- In 2022, revenue collection reached AFN year deflation of 12.6 percent in food and 193.9 billion (US$ 2.2 billion), which ac- 5.0 percent in non-food segments. These counted for almost 98 percent of the fiscal price dynamics likely stem from the econo- year's revised budget target of AFN 198.7 my adjusting to a structurally lower aggre- billion. Revenue collection for the first gate demand level, improved supply con- five months of the fiscal year 2023 ditions, and appreciating Afghani (AFN). reached AFN 76 billion, an 8 percent in- Declining prices, notably in food, have crease compared to the same period in supported a progressive improvement in the previous fiscal year but lower than MPO 2 Oct 23 the five-monthly target by 7.0 billion. until the economy can find new indige- Customs duty and Business receipt tax nous sources of growth that address un- accounted for 60 percent of the collection. Outlook employment and job quality challenges. In contrast, revenue collection from in- However, there are notable downside land sources saw a marginal 0.9 percent The outlook is uncertain amid a mix of risks to this baseline scenario. The uptick compared to the prior year. economic indicators and subject to signif- regime's exclusionary nature and gender Although the banking system remains un- icant downside risk. Poor sentiments and policies could trigger more external sup- der stress, there are signs that the sharp uncertainty may lead to hesitancy on the port cuts and hinder recovery. If deflation decline in deposits has been halted. Pub- part of the private sector to invest, and persists, a further downward adjustment licly available data shows that in the first the ongoing deflation is expected to re- of aggregate demand could cause the quarter of 2023, deposits increased by five sult in more layoffs in the short to medi- economy to contract significantly com- percent after a nine percent decrease in the um term. In a baseline scenario with lim- pared to the baseline. While the ban on previous year. The banks are strategically ited humanitarian and basic service aid growing Poppy can limit production, it shifting their asset base towards more liq- compared to 2022, the economy is pro- can result in farmers losing income and uid assets, a move prompted by diminish- jected to remain stagnant at best, with lead to social unrest. Stability concerns in ing prospects in interest income. Banks a wide confidence interval skewed to- the banking sector are also a risk. If these have intensified their focus on fee and wards the downside. Per capita income risks materialize, the projected GDP path commission-based revenues. Nevertheless, will decline due to an increasing popula- will shift downwards, potentially creating the sector is vulnerable. Without the pre- tion. Under this scenario, poverty is like- negative regional and global spillovers vailing forbearance measures, many banks ly to remain high, and vulnerability to and pushing more people into depriva- would face undercapitalization. falling into poverty is a genuine concern tion and food insecurity. MPO 3 Oct 23 Bangladesh’s expected graduation from UN LDC status in 2026 will gradually re- BANGLADESH Key conditions and sult in a loss of preferential access to exter- nal markets. Export diversification away challenges from ready-made garments (RMG) and ne- gotiation of free trade agreements are key Table 1 2022 Macroeconomic stability and strong export medium-term objectives. A coordinated Population, million 171.2 performance underpinned real GDP reform program of revenue mobilization, GDP, current US$ billion 460.2 growth, averaging 6.6 percent over the tariff modernization, and elimination of GDP per capita, current US$ 2688.4 decade preceding the COVID-19 pandem- non-tariff barriers would promote export a 13.5 International poverty rate ($2.15) ic. Growth remained positive during the diversification and boost growth. Address- a 51.6 pandemic, supported by an extensive stim- ing financial sector vulnerabilities and Lower middle-income poverty rate ($3.65) a 86.9 ulus package and accommodative mone- streamlining business regulations would Upper middle-income poverty rate ($6.85) Gini index a 32.4 tary policy. From 2016 to 2022, poverty in- support greater foreign investment in- School enrollment, primary (% gross) b 115.9 cidence declined by 2.1 percentage points flows. Improving governance, building b 72.4 (at the US$ 3.65 poverty line) and 0.7 per- human capital, and mitigating climate Life expectancy at birth, years centage points (at US$ 2.15) annually. risks are key long-term challenges. Increas- Total GHG emissions (mtCO2e) 265.3 Non-monetary dimensions of well-being, ing domestic resource mobilization is criti- Source: WDI, Macro Poverty Outlook, and official data. such as health and access to services, im- cal as revenue collection is very low at 7.9 a/ Most recent value (2016), 2017 PPPs. b/ Most recent WDI value (2021). proved significantly. Multidimensional percent of GDP. poverty declined from 45.3 percent to 30.6 percent over the same period, but inequality based on the Gini coefficient remained un- The post-pandemic recovery is expected to changed. The proportion of poor house- Recent developments holds with social protection increased from slow from 6.0 percent real GDP growth 31 percent in FY16 to 48 percent in FY22. Real GDP growth declined to 6.0 percent in in FY23 to 5.6 percent in FY24, as elevat- Economic conditions deteriorated in FY22, FY23 as private consumption and invest- ed inflation weighs on spending and im- as inflation accelerated, and the balance of ment growth slowed to 3.5 and 1.7 per- payments (BoP) turned into deficit. A mul- cent from 7.5 and 11.7 percent, respective- port restrictions, and financial sector vul- tiple exchange rate regime introduced in ly, in FY22. On the supply side, industrial nerabilities constrain private investment. September 2022 contributed to a financial growth moderated as energy shortages Poverty is projected to continue to de- account deficit. FX rationing measures re- and import restrictions offset the steady cline, and inequality to remain stagnant. stricted letters of credit for imports, lead- external demand for RMG. The services Export diversification and domestic rev- ing to rolling electricity blackouts to con- sector slowed as domestic purchasing serve energy. Rising financial sector vul- power declined. Agricultural growth re- enue mobilization remain key policy pri- nerabilities have emerged as a challenge mained modest. orities ahead of Least Developed Country to the growth outlook. The unemployment Inflation reached 9.6 percent in July 2023, (LDC) graduation. rate, at 3.6 percent, was low in 2022 and driven by upward adjustments of do- the female labor force participation rate, at mestic energy prices, rising food prices, 42.7 percent, was almost half that of males. and depreciation of the Taka. This likely FIGURE 1 Bangladesh / Real GDP growth and contributions FIGURE 2 Bangladesh / Actual and projected poverty rates to real GDP growth and real private consumption per capita Percent, percentage points Poverty rate (%) Real private consumption per capita (constant LCU) 15 100 140000 90 10 120000 80 70 100000 5 60 80000 50 0 60000 40 30 40000 -5 20 20000 -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 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real priv. cons. pc Sources: Bangladesh Bureau of Statistics and World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 4 Oct 23 moderated the relatively rapid poverty As expenditure growth outpaced revenue FY24 as import restrictions persist, prior to reduction rate as poor households allo- growth, the fiscal deficit increased to an es- widening over the medium term as poli- cate more than half of their budget to timated 5.3 percent of GDP in FY23 from cies normalize. Remittance inflows are ex- food. Bangladesh Bank (BB) raised the 4.3 percent in FY22. The public debt to pected to rise, underpinned by a higher main policy rate by a cumulative 175 GDP ratio is estimated to have increased outflow of workers. The financial account basis points since May 2022. However, to 35.3 percent but remained sustainable, is expected to return to surplus with the re- monetary policy transmission was im- with a low risk of debt distress. sumption of trade credit flows and a high- paired by caps on lending rates and ris- er volume of external financing. Addition- ing financial sector vulnerabilities. The al exchange rate flexibility would acceler- nonperforming loan ratio increased to 8.2 ate the stabilization of FX reserves. percent in FY22 from 7.9 percent in FY21. Outlook The fiscal deficit is projected to stay below Reflecting these trends, the growth rate 5.0 percent of GDP over the medium term. of bank credit to the private sector con- Growth is expected to decelerate to 5.6 Nominal revenues will rise with increasing tinued to moderate in FY23. percent in FY24 before returning gradu- trade, improving domestic activity, and The current account deficit (CAD) nar- ally to its long-term trend. Elevated in- ongoing efforts to strengthen the tax ad- rowed sharply to 0.8 percent of GDP in flation will weigh on consumer spending, ministration. Over the longer term, rising FY23 as exports grew by 15.7 percent and and private investment will remain con- public expenditure requirements to meet imports contracted by 3.9 percent. The strained by import restrictions, FX ra- infrastructure needs, mitigate climate vul- growth of official remittance inflows re- tioning, and uncertainty ahead of upcom- nerabilities, and accelerate human capital mained muted at 2.8 percent. However, the ing elections. As consumption recovers investment will require the mobilization of financial account deficit surged to US$ 2.1 to its long-term path, it is expected to additional revenues, as trade-based taxes billion, led by a decline in net commercial contribute to a marginal decrease in ex- decline with tariff modernization. bank assets and short-term lending. As a treme poverty (based on the international Downside risks to the growth outlook result, the BoP deficit widened to 1.9 per- poverty line) from 5.0 percent in FY23 have increased substantially. The pace of cent of GDP. Official exchange rates depre- to 4.7 percent in FY24, and moderate monetary reforms may be insufficient, ciated within a narrower range, remaining poverty (based on the lower middle-in- leading to further decumulation of FX re- insufficient to clear the FX market. BB in- come poverty line), from 29.1 to 27.4 per- serves. Tighter liquidity conditions could tervened heavily in the market to main- cent. Inequality is expected to remain un- exacerbate banking sector vulnerabilities. tain exchange rate caps. Gross FX reserves changed (Figure 2). Reforms to expedite the recognition and declined to US$ 24.8 billion at end-June External sector pressure will ease gradual- resolution of stressed assets will enable ef- 2023, providing a cover of 3.5 months of ly, with export growth remaining resilient. ficient financial intermediation and reduce prospective imports. The CAD is expected to narrow further in downside risks to growth. TABLE 2 Bangladesh / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019/20 2020/21 2021/22 2022/23e 2023/24f 2024/25f a Real GDP growth, at constant market prices 3.4 6.9 7.1 6.0 5.6 5.8 Private consumption 3.0 8.0 7.5 3.5 5.3 5.6 Government consumption 2.0 6.9 6.2 3.1 4.7 6.3 Gross fixed capital investment 3.9 8.1 11.7 1.7 4.9 7.9 Exports, goods and services -17.5 9.2 29.4 15.7 9.4 8.9 Imports, goods and services -11.4 15.3 31.2 -3.9 6.0 11.4 a Real GDP growth, at constant factor prices 3.8 7.0 7.2 6.3 5.7 5.8 Agriculture 3.4 3.2 3.1 2.6 2.2 3.1 Industry 3.6 10.3 9.9 8.2 7.4 7.4 Services 3.9 5.7 6.3 5.9 5.2 5.2 Inflation (consumer price index) 5.6 5.6 6.1 9.0 8.5 7.7 Current account balance (% of GDP) -1.5 -1.1 -4.1 -0.8 -0.3 -0.6 Net foreign direct investment inflow (% of GDP) 0.3 0.3 0.4 0.4 0.4 0.4 Fiscal balance (% of GDP) -4.8 -3.7 -4.6 -5.3 -5.0 -4.6 Revenues (% of GDP) 8.5 9.4 8.5 7.9 8.3 8.5 Debt (% of GDP) 31.7 32.4 33.7 35.3 36.0 36.4 Primary balance (% of GDP) -2.9 -1.7 -2.6 -3.1 -2.6 -2.2 b,c International poverty rate ($2.15 in 2017 PPP) .. .. 5.0 5.0 4.7 4.2 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) .. .. 30.0 29.1 27.4 25.3 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) .. .. 74.1 73.5 71.6 69.3 GHG emissions growth (mtCO2e) 1.9 4.7 4.5 3.6 3.2 3.2 Energy related GHG emissions (% of total) 39.4 40.8 42.0 42.6 43.4 44.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ FY23 estimates based on BBS provisional estimates. b/ Calculations based on SAR-POV harmonization, using 2022-HIES. Actual data: 2022. Forecasts are from 2023 to 2025. c/ Projections using microsimulation methodology. MPO 5 Oct 23 Pandemic-related relief measures and weak public revenue performance have re- BHUTAN Key conditions and sulted in high fiscal deficits and public debt. Financial sector vulnerabilities re- challenges main substantial due to high non-perform- ing loans. The state holding compa- Table 1 2022 Rapid economic growth has contributed to ny—Druk Holding and Investments—in- Population, million 0.8 substantial poverty reduction over the last vested in crypto-mining operations to ac- GDP, current US$ billion 2.6 two decades. Annual real GDP growth has celerate digital transformation towards di- GDP per capita, current US$ 3321.7 averaged 7.5 percent since the 1980s, driven versifying the economy, which resulted in a 0.0 International poverty rate ($2.15) by the public sector-led hydropower sector a significant decline of international re- a 0.5 and strong performance in services, includ- serves and a widening of the current ac- Lower middle-income poverty rate ($3.65) a 8.4 ing tourism. The ongoing poverty and equi- count deficit (CAD) due to imports of in- Upper middle-income poverty rate ($6.85) Gini index a 28.5 ty assessment shows that extreme poverty formation technology (IT) equipment. School enrollment, primary (% gross) b 105.7 based on $2.15/day was eliminated by 2022, Election-related spending and the materi- b 71.8 and the population living below the $6.85/ alization of financial sector contingent lia- Life expectancy at birth, years day poverty line for upper-middle-income bilities could further erode buffers in FY23/ Total GHG emissions (mtCO2e) -5.4 countries decreased from 39.5 percent to 8.5 24, given that about 60 percent of assets Source: WDI, Macro Poverty Outlook, and official data. percent between 2017 and 2022. The reduc- of the financial sector are controlled by the a/ Most recent value (2022), 2017 PPPs. b/ Most recent WDI value (2021). tion in poverty can be attributed to the public sector. Additional delays in the growth in labour and agriculture productiv- commissioning of hydro projects could ity and income, as well as remittances, which further constrain the country’s ability to led to an increase in real per capita consump- narrow fiscal and external balances. tion, especially in rural areas. Multidimen- Output is estimated to have grown by 4.6 sional poverty has also declined, which is re- percent in FY22/23, supported by the re- flected in the reduction of food poverty and opening of borders for tourism in Septem- improved access to education, water, and Recent developments ber 2022. However, twin deficits remained sanitation. The Gini index, which measures income inequality, decreased from 37 in The economy has grown by 4.6 percent high in FY22/23. Election-related spending 2017 to 28 in 2022. Despite this progress, vul- in FY22/23 (July 2022 to June 2023), sup- and the materialization of financial sector nerability to poverty and spatial inequality ported by the reopening of borders for contingent liabilities could further erode remains a significant challenge. Moreover, tourism in September 2022. The industry buffers in FY23/24. High unemployment youth unemployment increased to 29 per- sector grew by 5.1 percent, reflecting a rates since the COVID-19 pandemic, par- cent in 2022, which contributed to an in- strengthening of construction and manu- crease in emigration and loss of human capi- facturing activities, but the electricity sec- ticularly among the youth, contributed to tal from the country. tor contracted. The services sector grew significant emigration. An estimated 0.5 The economy has been significantly affect- by 5.0 percent, supported by transport- percent of the population lived below the ed by the series of external shocks of the and trade-related services, resulting in $3.65/day poverty line in 2022. COVID-19 pandemic and the global ram- more employment opportunities in the ifications of Russia’s invasion of Ukraine. sector, including an increase in hotel and FIGURE 1 Bhutan / Unemployment indicators FIGURE 2 Bhutan / Actual and projected poverty rates and real GDP per capita Percent Poverty rate (%) Real GDP per capita (constant LCU) 30 70 120000 National 28.6 60 100000 25 22.6 Youth 20.9 50 80000 20 15.7 40 60000 15 30 12.3 11.9 13.2 40000 20 10 5.9 20000 5.0 4.8 10 5 3.4 2.1 3.1 2.7 0 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 0 International poverty rate Lower middle-income pov. rate 2016 2017 2018 2019 2020 2021 2022 Upper middle-income pov. rate Real GDP pc Sources: Labour Force Survey and National Statistics Bureau (NSB). Source: World Bank. Notes: see Table 2. MPO 6 Oct 23 restaurant jobs. Tourist arrivals remained prices. As a result, gross international re- The fiscal deficit is expected to increase below pre-COVID-19 levels because of serves are expected to decline further from to 6.1 percent of GDP in FY23/24 due weaker consumer confidence globally and US$833 million in June 2022 to US$533 mil- to an increase in current spending fol- the new tourism levy act, which tripled lion in June 2023, equivalent to 4.3 months lowing a major salary hike to address the sustainable development fee (SDF) for of FY22/23 imports. significant staff attritions. An increase in international tourists. However, the SDF tax revenue will be offset by lower hy- was halved starting in September 2023 to dro profit transfers and external grants. attract more high-end tourists. Capital expenditures are projected to de- Average inflation moderated from 5.9 per- Outlook cline as the 12th FYP ended in June 2023, cent in FY21/22 to 4.6 percent in FY22/23, and capital spending is typically lower driven by a slowdown in imported food The real GDP growth rate is projected to in the first two years of a new FYP. inflation. Non-food inflation remained ele- decline to 4 percent in FY23/24. Overall The fiscal deficit is expected to decline vated at 5.9 percent. growth is expected to be supported by beyond FY24/25, reflecting a moderation The fiscal deficit narrowed from 7.7 per- higher growth in tourism-related services. in primary recurrent expenditure and in- cent of GDP in FY21/22 to 5.1 percent in On the demand side, growth is supported creased hydro revenue. FY22/23 due to higher domestic revenue by private and public consumption, re- Despite a decline in hydro debt, public and lower capital spending. Total revenue flecting higher government spending. debt is projected to remain elevated as a increased due to higher non-hydro rev- However, public investment is contribut- share of GDP in the medium term due to enue, reflecting the gradual recovery in the ing negatively to growth due to a decline high fiscal deficits. Risks to debt sustain- industry and services sectors. Total expen- in capital spending. Medium-term growth ability are expected to remain moderate as ditures declined because of lower capital is expected to be supported by a recovery the bulk of the debt is linked to hydro pro- spending in the last year of the Twelfth in the non-hydro industry and services ject loans from India (to be repaid from fu- Five Year Plan (FYP). sectors, and by the commissioning of a ture hydro revenues) with low refinancing The CAD has remained elevated at 27.8 new hydro plant. Inflation is expected to and exchange rate risks. percent in FY22/23, due to imports of IT remain elevated in the short term owing to The CAD is projected to decline to 17 per- equipment and a slow recovery of tourism. higher import prices, before moderating in cent of GDP in FY23/24 due to a large re- Exports increased, reflecting higher the medium term. The incidence of pover- duction in IT equipment imports, and to tourism receipts (albeit from a low base ty is estimated to decrease slightly to 0.4 moderate further in the medium term, given near-zero tourism receipts in FY21/ percent and 7.9 percent in 2023, based on supported by an increase in tourism and 22). Goods imports are expected to remain $3.65/day and $6.85/day, respectively. electricity exports. International reserves high, reflecting the import of crypto min- However, about 7 percent of the popula- are expected to increase to 6.2 months of ing equipment and elevated commodity tion will still be vulnerable to poverty. import coverage in FY23/24. TABLE 2 Bhutan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019/20 2020/21 2021/22 2022/23e 2023/24f 2024/25f a Real GDP growth, at constant market prices -2.3 -3.3 4.8 4.6 4.0 4.6 Private consumption 0.1 -1.2 -3.8 -0.6 5.8 6.5 Government consumption 7.3 4.9 2.0 -3.7 6.0 -7.1 Gross fixed capital investment -16.5 -3.0 23.1 10.9 -8.4 2.1 Exports, goods and services -4.1 -7.3 12.1 7.5 0.5 3.4 Imports, goods and services -9.2 0.8 9.8 2.4 -7.1 -1.1 Real GDP growth, at constant factor prices -0.7 -2.2 4.8 4.6 4.0 4.6 Agriculture 2.9 3.3 0.5 1.2 3.4 3.4 Industry -5.5 -5.9 3.7 5.1 2.4 5.6 Services 2.5 -0.5 6.6 5.0 5.3 4.2 Inflation (consumer price index) 3.0 8.2 5.9 4.6 4.4 4.0 Current account balance (% of GDP) -15.8 -11.9 -32.4 -27.8 -17.0 -8.5 Fiscal balance (% of GDP) -1.9 -6.2 -7.7 -5.1 -6.1 -4.5 Revenues (% of GDP) 31.1 33.2 27.7 28.2 24.3 27.0 Debt (% of GDP) 122.8 132.4 131.1 130.5 129.2 124.6 Primary balance (% of GDP) -1.5 -5.2 -6.1 -3.2 -3.9 -2.1 b,c International poverty rate ($2.15 in 2017 PPP) .. .. 0.0 0.0 0.0 0.0 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) .. .. 0.5 0.4 0.4 0.3 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) .. .. 8.4 7.9 7.2 6.7 GHG emissions growth (mtCO2e) 1.5 1.6 -1.3 -1.6 -1.1 -2.0 Energy related GHG emissions (% of total) -15.1 -14.5 -15.2 -16.0 -16.6 -17.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ The GDP estimates in the AM23 MPO reflect the base year 2000. The National Statistics Bureau has recently updated the base year from 2000 to 2017. The SM24 MPO will reflect the rebased NIA estimates for 2017 to 2022. b/ Calculations based on SAR-POV harmonization, using 2022-BLSS. Actual data: 2022. Forecasts are from 2023 to 2025. c/ Projection using neutral distribution (2022) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. MPO 7 Oct 23 global growth, higher oil prices, and more persistent inflationary pressures. Howev- INDIA Key conditions and er, they remain manageable given India’s large and diversified economic base and challenges significant reserves buffers. For India to achieve the national goal of becoming a Table 1 2022 Between 2000 and 2019, India enjoyed high-income country by 2047, real growth Population, million 1417.2 rapid economic growth averaging 6.6 per- would need to rise sustainably to around GDP, current US$ billion 3388.5 cent per annum. GDP per capita more than 8 percent per annum on average. This re- GDP per capita, current US$ 2391.0 doubled and extreme poverty (at $2.15 quires more ambitious structural reforms a 102.1 School enrollment, primary (% gross) 2017 PPP) fell from 39.9 percent in 2004 to enhance the quality of education, gener- a 67.2 to 12.7 percent in 2019. This strong perfor- ate more and better jobs (in terms of remu- Life expectancy at birth, years Total GHG emissions (mtCO2e) 3700.1 mance reflected a demographic dividend, neration, stability, and labor conditions), Source: WDI, Macro Poverty Outlook, and official data. steps taken to integrate India into the glob- increase the economic participation of a/ Most recent WDI value (2021). al economy and improve the business en- women and youth, improve infrastructure, vironment, and prudent monetary and fis- and strengthen the business environment. cal management. Output contracted by 5.8 percent in FY20/21 due to the COVID-19 shock but rebounded swiftly by 9.1 percent in FY21/22 and returned to its pre-pan- Recent developments Growth moderated to 7.2 percent in demic level. Extreme poverty declined by FY22/23. The post-COVID rebound fad- 3.4 percentage points in FY22/23 relative to Real GDP growth decelerated to 7.2 percent ed, and the government consolidated re- FY20/21, to 11.3 percent. Meanwhile, mod- in FY22/23, from 9.1 percent in the previous current spending. Growth is projected to erate poverty (at $3.65 2017 PPP – the year, mainly due to waning base effects. Pri- threshold typically used for L-MICs) de- vate consumption and investment growth decline further in FY23/24 as it reverts clined by 4.6 percentage points to 45.1 per- moderated as the post-pandemic catch-up to its potential rate (6-6.5 percent), with cent. Even though growth helped reduce tapered off, and public consumption stag- external downside risks. Extreme pover- monetary poverty, 16.4 percent of the pop- nated due to fiscal consolidation of recur- ty hovers around 11 percent, while mod- ulation faces deprivations that classify rent spending (though public investment them as multidimensionally poor, and one expanded). Total consumption moderated erate poverty is around 45 percent. To in three Indians is malnourished. Con- further, and exports shrank, in Q1 FY23/24 increase potential growth and reduce sumption inequality remained stagnant at (April-June), but investment -especially poverty, structural reforms should seek 0.35 (using the GINI coefficient). public investment- continued to grow at a to improve human capital, key infra- Growth decelerated to 7.2 percent in FY22/ robust pace. The services sector drove 23 and is projected to slow to 6.3 percent in growth on the supply side, with fast expan- structure, the business environment, FY23/24, with external downside risks. The sion in high-contact services like retail trade, and jobs, particularly for women. moderation of growth reflects base effects tourism, and transportation. (as the post-COVID rebound fades), weak To address inflationary pressures (infla- external demand, and domestic price pres- tion reached 7.8 percent in April 2022) the sures. Risks include slower-than-expected RBI’s Monetary Policy Committee raised FIGURE 1 India / Real GDP growth and contributions to real FIGURE 2 India / Actual and projected poverty rates and GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 15 80 140000 Forecast 70 120000 10 60 100000 5 50 80000 40 0 60000 30 -5 40000 20 10 20000 -10 FY16/17 FY18/19 FY20/21 FY22/23 FY24/25 0 0 Others Net Exports 2009 2011 2013 2015 2017 2019 2021 2023 2025 Gross Fixed Capital Formation Government Consumption International poverty rate Lower middle-income pov. rate Private Consumption Real GDP, y/y percent Real GDP pc Sources: National Statistics Office (NSO) and World Bank staff calculations. Source: World Bank. Notes: see Table 2. Notes: FY14/15 refers to the fiscal year 2014-15 (April 2014-March 2015) and so on. MPO 8 Oct 23 the policy rate by 250 basis points in FY22/ room to ramp up capital expenditure deficit is expected to narrow to around 1.5 23 and held the rate unchanged at 6.5 per- while decreasing total spending. Healthy percent of GDP over the forecast period as cent since February 2023. Both headline growth and a narrower fiscal deficit commodity prices decline relative to FY22/ and core inflation trended down until May brought public debt down from 84.8 per- 23, while services exports and remittances 2023, to 4.3 and 5.1 percent, respectively. cent of GDP in FY21/22 to 82.9 percent remain buoyant. Foreign exchange re- However, recent abnormal monsoon rain- in FY22/23. The current account deficit serves are projected to remain adequate at fall pushed up food prices, driving head- widened to 2.0 percent of GDP in FY22/ around seven months of imports. line inflation to 7.4 percent in July 2023. 23. Services exports and remittance in- Headline inflation should decline over the The increase in food prices disproportion- flows increased, but the balance of trade medium term as domestic demand moder- ately affects the poor and could aggravate in goods deteriorated with rising glob- ates and global commodity prices normal- malnutrition which already affects one- al crude oil prices. Net foreign direct in- ize. Inflationary pressures from food prices third of the population. vestment fell below 1 percent of GDP, will abate gradually as domestic supply Urban unemployment fell to 7.2 percent in from 1.2 percent in FY21/22, and net constraints are resolved. FY22/23 from 9.8 percent in FY21/22, but portfolio investment turned negative. As The overall fiscal deficit is projected to nar- the share of regular salaried workers de- a result, foreign exchange reserves fell to row, bringing down public debt slowly to clined, with possible implications for in- US$578 billion, equivalent to 7 months of around 82 percent of GDP over the medi- come stability. The rural labor market import cover. um term. Revenues are projected to return showed signs of continued distress as de- to pre-pandemic levels as a share of GDP, mand for employment under the rural em- thanks to improving compliance and ployment guarantee program exceeded healthy corporate profits. Current spend- pre-pandemic levels in FY22/23, and real Outlook ing should continue to fall as a share of earnings remained stagnant. One in three GDP, with capital spending elevated at youths aged 15-29 and over half of the Growth is projected to moderate to 6.3 per- over 5 percent of GDP. However, any fiscal young women were outside employment, cent in FY23/24, as consumption growth measures to mitigate the current inflation- education, or training in FY21/22. continues to decelerate, and external head- ary pressures may affect this projection. The general government fiscal deficit nar- winds depress foreign demand. Over the Growth should still drive further declines rowed to 9.0 percent of GDP in FY22/23, medium term, growth should hover in extreme and moderate poverty, to 11.2 thanks to strong tax revenue growth (15 around its potential rate of 6.5 percent. In- percent and 44.4 percent in FY23/24, re- percent) and consolidation of the central vestment growth is projected to remain ro- spectively. However, the pace of poverty government’s recurrent spending, through bust, supported by high public investment reduction will depend on the inflation tra- the gradual withdrawal of remaining pan- and improved corporate and banking sec- jectory and how growth translates into in- demic-related measures. This created tor balance sheets. The current account comes for the most vulnerable. TABLE 2 India / 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 -5.8 9.1 7.2 6.3 6.4 6.5 Private consumption -5.2 11.2 7.5 5.9 6.0 6.4 Government consumption -0.9 6.6 0.1 4.1 5.1 5.8 Gross fixed capital investment -7.3 14.6 11.4 8.9 7.8 7.3 Exports, goods and services -9.1 29.3 13.6 0.9 6.7 8.2 Imports, goods and services -13.7 21.8 17.1 3.0 7.2 8.7 Real GDP growth, at constant factor prices -4.2 8.8 7.0 6.3 6.4 6.5 Agriculture 4.1 3.5 4.0 3.5 3.6 3.7 Industry -0.9 11.6 4.4 5.7 6.4 6.4 Services -8.2 8.8 9.5 7.4 7.2 7.3 Inflation (consumer price index) 6.2 5.5 6.7 5.9 4.7 4.1 Current account balance (% of GDP) 0.9 -1.2 -2.0 -1.4 -1.2 -1.6 Net foreign direct investment inflow (% of GDP) 1.6 1.2 0.8 1.1 1.4 1.5 Fiscal balance (% of GDP) -12.6 -9.6 -9.0 -8.7 -8.1 -7.9 Revenues (% of GDP) 18.5 19.5 18.9 19.5 19.9 20.0 Debt (% of GDP) 89.3 84.8 82.9 82.9 82.5 82.4 Primary balance (% of GDP) -7.2 -4.4 -3.9 -3.3 -2.7 -2.5 a,b International poverty rate ($2.15 in 2017 PPP) 14.7 11.9 11.3 11.2 10.6 10.3 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 49.7 46.5 45.1 44.4 44.0 42.8 GHG emissions growth (mtCO2e) -4.0 8.3 5.8 3.6 3.6 3.6 Energy related GHG emissions (% of total) 69.3 71.5 72.8 73.4 73.9 74.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on CPHS data and the approach 1 imputation methodology from Roy & van der Weide (2022), with 200 simulations. Projections using annual growth rates for three sectors of employment with pass-through = 0.65 and inflation rates for food, fuel and other consumption. Based on GDP per capita at constant factor prices. Baseline distribution taken from one imputed consumption vector matching the national poverty rates. b/ Actual data: 2021. Nowcast: 2022. Forecasts are from 2023 to 2025. MPO 9 Oct 23 to welfare include differential access to economic opportunities in Male relative to MALDIVES Key conditions and atolls – mirrored by a higher Gini index over the whole population (29.3) than challenges within Male (25.2) or within atolls (24.2), higher vulnerability among the self-em- Table 1 2022 Tourism has maintained its robust perfor- ployed, and overcrowding affecting poorer Population, million 0.5 mance in the first half of 2023. Despite urban households. GDP, current US$ billion 6.2 the Russian invasion of Ukraine, arrivals To promote development, Maldives has GDP per capita, current US$ 11777.6 from Russia remain strong. An earlier- scaled up infrastructure investments since a 3.9 Upper middle-income poverty rate ($6.85) than-expected reopening of the Chinese 2016. Although these investments have con- a 29.3 market in January has compensated for tributed towards growth and better living Gini index b 100.8 fewer tourists from India and Gulf coun- standards, financing of these large invest- School enrollment, primary (% gross) Life expectancy at birth, years b 79.9 tries, while arrivals from Europe re- ments through non-concessional sources Total GHG emissions (mtCO2e) 2.9 mained high. This supported employ- has led to growing debt vulnerabilities. ment opportunities, which are particular- Despite an increased cost of external bor- Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2019), 2017 PPPs. ly important for the poorest. rowing, the government continued to use b/ WDI for School enrollment (2020); Life expectancy Heavy reliance on tourism and limited di- foreign financing for infrastructure invest- (2021). versification remain a key structural chal- ments in 2023, while also relying on do- lenge. As an economy that is heavily im- mestic borrowing to support recurrent port-dependent, Maldives is also facing spending. This has led to a concerning rise significant external and inflationary pres- in the financial sector's exposure to the The economy has maintained its strong sures due to high global commodity prices, sovereign. The debt stock and debt servic- growth momentum in 2023 due to rising negatively affecting public finances – given ing risks are expected to remain high. the government’s blanket provision subsi- tourist arrivals. The growth and poverty dies to help contain domestic price increas- outlook remains positive, although con- es. This is further compounded by contin- cerns around vulnerability to shocks and ued high capital expenditure and public Recent developments inequalities remain. Commodity price debt, an increasing wage bill, and a costly health insurance scheme. The economy grew by 13.9 percent (y-o-y) volatility exerts pressure on external and Targeted austerity measures could mitigate in 2022 and 5.5 percent (y-o-y) in Q12023, fiscal balances, through costlier imports risks to vulnerable households, particularly surpassing the pre-pandemic nominal and higher subsidies. Elevated levels of in the atolls, where 93 percent of the poor GDP level and translating into projected spending sustain high fiscal deficits and live, as past welfare gains have been driven poverty rates below 2019 levels. Tourist ar- debt vulnerabilities. Comprehensive sub- by a strong redistributive model. The latter rivals reached 1.2 million by August 2023 includes universal access to basic health and and are projected at 1.9 million in 2023 – sidy and public investment reforms are education services, pensions, health insur- 13.8 percent higher than in 2022. needed for debt sustainability while miti- ance, and income support programs – which Along with the Goods and Services Tax gating related impacts on the vulnerable. contribute to a larger share of income for (GST) increase in January 2023, higher glob- poorer households. Additional challenges al commodity prices led to rising domestic FIGURE 1 Maldives / Tourist arrivals FIGURE 2 Maldives / Actual and projected poverty rate and real GDP per capita Number of tourist arrivals Poverty rate (%) Real GDP per capita (constant LCU) 210000 60 250000 180000 50 200000 150000 40 120000 150000 90000 30 100000 60000 20 30000 50000 10 0 0 0 -30000 2009 2011 2013 2015 2017 2019 2021 2023 2025 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Upper middle-income pov. rate Real GDP pc 2019 2020 2021 2022 2023 Sources: Ministry of Tourism and World Bank staff calculations. Source: World Bank. Notes: see Table 2. MPO 10 Oct 23 inflation, which reached an average of 3.5 High levels of consumption, elevated glob- percent (y-o-y) in H12023 – higher than the al commodity prices, and the GST rate hike historical average of 0.5 percent. Price in- Outlook are projected to keep inflation above the creases were particularly acute in the food historical average in the medium term. -climbing to 8.0 percent in March before The economy is projected to grow by 5.6 Without targeted support, higher prices falling to 4.5 percent in June-, transport, percent on average in the medium term, passed onto households could worsen the health, and restaurant services sectors. supported by robust tourism performance. poverty outlook. Therefore, future subsidy Despite growth in tourism earnings, the cur- The return of Chinese tourists, together reforms need to be carefully designed to rent account deficit doubled to 16.7 percent with increasing arrivals from new and ex- minimize welfare risks. of GDP in 2022, due to far costlier oil imports isting markets are expected to lead to sus- The current account deficit is expected to and capital imports for large investment tained growth. Tourism will further be remain elevated given commodity price projects. High import costs and external supported by the expansion of Velana In- pressures and continued capital imports to debt repayments put significant pressure on ternational Airport (planned to be com- complete ongoing and planned public in- gross reserves, which fell from US$790 mil- pleted by 2025), a diversified tourism sec- frastructure projects. Volatile oil prices and lion in January to US$594.1 million in July tor, and investments in new resorts. rising external financing needs – including (from 2.8 to 2.0 months of imports). Despite the recent increase in GST collec- debt servicing – are expected to sustain Given subsidy reforms were not imple- tions, in the absence of fiscal reforms, any pressure on official reserves. mented and capital spending cuts have not meaningful improvement in the fiscal bal- Downside risks persist. Tourism could happened – both of which were proposed ance will be offset by continued high levels be adversely impacted by an extended in the Budget – spending rose in 2023. of spending. Public debt will, therefore, re- global slowdown. Any further widening However, this was somewhat offset by main high. A larger fiscal adjustment is re- of the current account deficit could put higher tax collections owing to the robust quired to build external buffers and reduce additional pressure on reserves. The growth and increased tourism GST. Conse- fiscal vulnerabilities, including reducing government faces external debt servic- quently, the 12-month rolling fiscal deficit spending on untargeted subsidies and bulk ing payments ofUS$570 million on av- declined in May to an estimated level of procurement for pharmaceutical purchases, erage over the next two years amidst around 11 percent of GDP compared to and more effective public investment man- tighter global financing conditions. On 14.4 percent in 2022. MMA’s asset expo- agement. Better targeted transfers – includ- the upside, the global tourism sector sure to the government further rose to 52 ing redirecting inefficiently allocated re- outlook is robust, and with strong eco- percent of its total financial assets in sources– would help mitigate the negative nomic growth, poverty rates are expect- mid-2023, from 47.3 percent in 2022. impacts of subsidy reforms on the poor. ed to decline. TABLE 2 Maldives / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2020 2021 2022 2023e 2024f 2025f Real GDP growth, at constant market prices -32.9 37.7 13.9 6.5 5.2 5.5 Real GDP growth, at constant factor prices -30.1 33.8 15.0 6.5 5.2 5.5 Agriculture 6.6 -0.7 3.1 2.3 3.1 2.8 Industry -34.1 -4.6 25.2 9.7 7.7 3.1 Services -31.7 43.4 14.7 6.4 5.0 6.0 Inflation (consumer price index) -1.4 0.5 2.3 3.2 2.7 2.5 Current account balance (% of GDP) -35.8 -8.7 -16.7 -17.6 -20.9 -19.4 Net foreign direct investment inflow (% of GDP) 11.9 12.2 11.7 12.2 12.0 11.5 Fiscal balance (% of GDP) -23.7 -14.2 -14.4 -12.4 -11.8 -10.4 Revenues (% of GDP) 26.7 26.4 27.8 30.4 30.1 30.0 Debt (% of GDP) 151.6 112.1 113.5 113.7 115.1 116.3 Primary balance (% of GDP) -20.9 -11.6 -11.0 -8.9 -8.2 -6.7 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 19.1 6.7 3.1 1.9 1.0 0.7 GHG emissions growth (mtCO2e) -10.9 12.2 13.2 12.1 9.7 9.2 Energy related GHG emissions (% of total) 82.4 84.4 87.0 87.9 88.7 89.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on SAR-POV harmonization, using 2019-HIES. Actual data: 2019. Nowcast: 2020-2022. Forecasts are from 2023 to 2025. b/ Projections using microsimulation methodology. MPO 11 Oct 23 Nepal Living Standards Survey will up- date trends in national poverty and pro- NEPAL Key conditions and duce provincial poverty estimates. challenges Table 1 2022 Nepal’s economic growth averaged 4.3 Recent developments Population, million 30.5 percent annually between FY13 and FY23, GDP, current US$ billion 40.8 elevating the country to lower middle- The economy slowed to 1.9 percent GDP GDP per capita, current US$ 1336.5 income status in 2020. Growth benefited growth in FY23, reflecting a 150 basis a 8.2 International poverty rate ($2.15) from substantial remittance inflows aver- points increase in the policy rate and im- a 40.0 aging 23 percent of GDP per year over port restriction measures to stem foreign Lower middle-income poverty rate ($3.65) a 80.4 the same period. A structural deficit has exchange losses under the fixed exchange Upper middle-income poverty rate ($6.85) Gini index a 32.8 emerged following the transition to fed- rate regime. Manufacturing, construction, School enrollment, primary (% gross) b 127.4 eralism as new administrative structures and the wholesale and retail trade sectors b 68.4 have been established while spending re- all contracted. Despite the slowdown, in- Life expectancy at birth, years sponsibilities have yet to be fully de- flation accelerated to 7.8 percent, exceed- Total GHG emissions (mtCO2e) 52.5 volved. The jobs recovery following ing the central bank’s policy ceiling of 7 Source: WDI, Macro Poverty Outlook, and official data. COVID-19 was slow and unequal, with percent notwithstanding tighter monetary a/ Most recent value (2010), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy international remittances and domestic la- policy, reflecting in part India’s export ban (2021). bor mobility being the key factors sup- on wheat and flour. Lower and erratic porting the economic recovery. Structural monsoon rainfall could further increase economic vulnerability, exposure to a food prices and headline inflation, with the Nepal’s economy slowed in FY23 due to wide range of shocks, and spatial inequal- negative impact of increased food prices monetary tightening, sluggish capital ity define human development, poverty, falling disproportionately on poorer and inequality, and outcomes in Nepal. Social more vulnerable households. expenditure, and import restriction mea- protection programs are currently limited The current account deficit narrowed from sures. The sharp drop in imports led to in scope and will need to be re-designed 12.6 percent to 1.3 percent of GDP between a historic contraction in fiscal revenues to reach the poor and economically vul- FY22 and FY23, reflecting a significant de- and a wide fiscal deficit. Foreign re- nerable, especially in response to econom- cline in goods imports and a strong re- ic and climate-related shocks. Spatial in- bound in remittances. In the context of low serves rose as remittance inflows surged, equalities in access to basic child oppor- external debt amortizations, foreign re- while inflation remained high. Basic tunities such as health and education re- serves rose to 10 months of import cover as commodity prices, and a structural vul- main relevant despite sustained progress of end-FY23. nerability to falling back into poverty, on key indicators of non-monetary wel- As goods imports declined, fiscal revenue are likely to increase poverty in the fare. Improvements over the last decade fell from 23.1 percent to 19.2 percent of in access to basic services, including in GDP, leading to almost a doubling of the short term. With the lifting of import fiscal deficit from 3.2 percent to 6.1 per- electricity, health, and education, have restrictions mid-FY23, growth is expect- likely been accompanied by a reduction cent of GDP between FY22 and FY23. ed to recover through FY25. in poverty. The recently concluded fourth Expenditures also declined but by much 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 140 30 Pre-covid 5 year GDP trend 20 120 Actual GDP 10 100 0 80 -10 -20 60 -30 40 -40 FY18 FY19 FY20 FY21 FY22 FY23 20 Workers' remittances Balance of goods and services FY11 FY13 FY15 FY17 FY19 FY21 FY23 FY25 Current account balance Sources: World Bank staff projections and Nepal National Statistics Office. Sources: World Bank staff calculations and Nepal Rastra Bank. MPO 12 Oct 23 less, reflecting lower transfers to subna- support the industrial and services sectors. the current account deficit. Near-record tional governments. The deficit was fi- Agricultural growth is projected to slow in worker out-migration in FY23 will support nanced through external concessional bor- FY24 partly due to livestock losses, then remittance inflows in FY24 and FY25. rowing, domestic borrowing, and balances provide a boost in FY25. Revenue growth should increase in FY24 in other government accounts. The May Inflation is expected to remain above the with stronger GDP and import growth. 2023 Joint World Bank-IMF Debt Sustain- FY24 policy ceiling of 6.5 percent, re- The FY24 budget envisions lower capital ability Analysis finds that the country’s flecting the recent taxation of select basic spending, lower transfers to subnational risk of debt distress remains low. food items, India’s food export restric- governments, and higher debt servicing tions, and higher fuel prices. The removal costs. Public investment should rise in of VAT exemptions on basic food items FY25 as revenues grow. Public debt is ex- and necessities is expected to increase the pected to peak in FY24 and then recede Outlook poverty headcount by up to 1 percent- slightly to 41.2 percent of GDP by FY25. age point and increase economic vulnera- The fiscal deficit is projected to narrow to The baseline forecast assumes that: i) bility for the second and third consump- 3.3 percent of GDP by FY25. monetary policy will gradually ease; ii) tion quintiles. Continued high inflation in The forecast is subject to multiple down- lumpy skin disease affecting livestock – FY24 will weigh on household disposable side risks. An erratic monsoon could which has infected 1.3 million animals income and private consumption growth dampen agricultural growth. Alongside since April 2023 - will be under control and lead to decreased welfare, particu- potential livestock losses, this is likely to by mid-January 2024; iii) India’s export larly for poor and economically vulner- result in a negative economic outlook for food bans will be lifted by FY25; and, able households. A weak domestic labor the poor. Political uncertainty could hold iv) electricity exports will reach 1000 market that relies on informal and subsis- back investment. A renewed spike in com- megawatts annually by FY25. Under these tence jobs could exacerbate this negative modity prices or continued food export conditions, growth is expected to rebound welfare impact. bans by India would raise prices and to 3.9 percent in FY24 and 5 percent in Exports and FDI are small relative to widen the current account deficit. Higher FY25. The lagged impact of lifting import remittances and imports. Electricity ex- inflation could keep policy rates elevated, restriction measures in January 2023 and ports will support export growth while increase domestic debt servicing costs, and monetary policy loosening are expected to imports will rise more quickly, widening drag on growth. TABLE 2 Nepal / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2020 2021 2022 2023e 2024f 2025f Real GDP growth, at constant market prices -2.4 4.8 5.6 1.9 3.9 5.0 Private consumption 3.6 8.0 6.8 4.1 3.7 4.5 Government consumption 3.8 -1.7 9.6 -35.2 -19.3 8.1 Gross fixed capital investment -8.9 9.8 3.8 -10.9 14.5 8.6 Exports, goods and services -15.9 -21.3 34.1 5.5 12.1 18.4 Imports, goods and services -20.8 18.8 15.1 -17.2 10.3 9.7 Real GDP growth, at constant factor prices -2.4 4.5 5.3 2.2 3.9 5.0 Agriculture 2.4 2.8 2.2 2.7 2.1 2.5 Industry -4.0 6.9 10.8 0.6 3.2 6.3 Services -4.5 4.7 5.3 2.3 5.1 5.9 Inflation (consumer price index) 6.1 3.6 6.3 7.8 7.5 6.4 Current account balance (% of GDP) -0.9 -7.7 -12.6 -1.3 -3.7 -4.6 Net foreign direct investment inflow (% of GDP) 0.5 0.4 0.4 0.1 0.3 0.5 Fiscal balance (% of GDP) -5.4 -4.0 -3.2 -6.1 -3.5 -3.3 Revenues (% of GDP) 22.2 23.3 23.1 19.2 19.8 20.8 Debt (% of GDP) 36.9 39.9 40.8 41.3 41.4 41.2 Primary balance (% of GDP) -4.7 -3.2 -2.3 -4.7 -1.8 -1.9 GHG emissions growth (mtCO2e) 3.2 0.8 4.4 3.8 11.1 5.9 Energy related GHG emissions (% of total) 30.0 28.8 29.9 31.4 36.8 39.1 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 Oct 23 and at risk of becoming classified as poor if the situation deteriorates. PAKISTAN Key conditions and challenges Table 1 2022 Recent developments Pakistan’s strong post-pandemic recovery Population, million 235.8 came to a halt in FY23 with large eco- Pakistan’s economy is estimated to have GDP, current US$ billion 375.4 nomic imbalances that resulted from the contracted by 0.6 percent y-o-y in FY23, af- GDP per capita, current US$ 1592.1 delayed withdrawal of accommodative ter growing by an average of 5.6 percent a 4.9 International poverty rate ($2.15) policy, and a series of domestic and over FY21-22. The impact of devastating a 39.8 external economic shocks. Pressures on floods on agriculture and difficulties secur- Lower middle-income poverty rate ($3.65) a 84.5 domestic prices, external and fiscal bal- ing inputs, including fertilizers, slowed Upper middle-income poverty rate ($6.85) Gini index a 29.6 ances, the exchange rate, and foreign ex- agriculture output growth to a modest 1.0 School enrollment, primary (% gross) b 95.5 change reserves mounted amid surging percent. With 44 percent of poor workers b 66.1 world commodity prices, global mone- relying on agriculture, weak agricultural Life expectancy at birth, years tary tightening, recent catastrophic flood- performance had significant poverty im- Total GHG emissions (mtCO2e) 492.2 ing, and domestic political uncertainty. pacts. Supply chain disruptions due to im- Source: WDI, Macro Poverty Outlook, and official data. Confidence and economic activity col- port restrictions and flood impacts, high a/ Most recent value (2018), 2017 PPPs. b/ WDI for School enrollment (2019); Life expectancy lapsed due to import controls, periodic fuel and borrowing costs, political uncer- (2021). exchange rate fixing, creditworthiness tainty, and weak demand affected industry downgrades, and ballooning interest and service sector activity and are estimat- payments. Poverty is estimated to have ed to have contracted by around 3 and 0.5 Pakistan’s economy is estimated to have increased due to deteriorating wages and percent, respectively. This likely reduced contracted in FY23 amid the catastrophic job quality, along with high inflation the labor incomes of millions of workers, that eroded purchasing power, particu- especially those who moved to lower-pro- floods, high inflation, and tight macroeco- larly for the poor. ductivity informal jobs. nomic policy. Import controls exacerbated An IMF-SBA was recently approved, un- Average headline inflation rose to a mul- supply chain disruptions and under- locking new external financing. Still, risks ti-decade high of 29.2 percent y-o-y in mined confidence. Poverty is estimated to are exceptionally high, with the outlook FY23, up from 12.2 percent in FY22, ow- predicated on remaining on track with the ing to the weaker currency, reduced do- have increased due to record-high food SBA, fiscal restraint, and continued exter- mestic fuel and electricity subsidies, and and energy prices, weak labor markets, nal financing. Financial sector instability supply chain disruptions. Food inflation and flood-related damages. An IMF and policy slippages due to social tensions nearly tripled to 38.7 percent, particularly Stand-by Arrangement (SBA) was re- pose significant risks. Continued high in- affecting poorer households that spend cently approved, unlocking new external flation, localized insecurity, and weak half their budget on food. Due to differ- growth increase vulnerability to falling in- ing consumption patterns, households in financing. While recovering slightly, the poorest decile experienced a higher to poverty and worsen the situation of the GDP growth will remain below potential existing poor. More than 10 million people inflation rate (seven percentage points over the medium term. are currently just above the poverty line, higher) than the richest decile. Poverty is FIGURE 1 Pakistan / Real GDP growth and sectoral FIGURE 2 Pakistan / Actual and projected poverty rates and contributions to real GDP growth real private consumption per capita Percent, percentage points Poverty rate (%) Real private consumption per capita (constant LCU) 7 100 180000 Agriculture 6 90 160000 Industry 80 5 140000 Services 70 120000 4 GDP 60 100000 3 50 80000 2 40 60000 30 1 40000 20 0 10 20000 -1 0 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 -2 International poverty rate Lower middle-income pov. rate FY19 FY20 FY21 FY22 FY23e FY24f FY25f Upper middle-income pov. rate Real priv. cons. pc Sources: Pakistan Bureau of Statistics and World Bank staff estimates. Source: World Bank. Notes: see Table 2. Notes: Pakistan reports data on fiscal year (FY) basis. The fiscal year runs from July 1 through June 30. MPO 14 Oct 23 estimated to have increased by five percent- remained high at 7.8 percent of GDP, and weak confidence due to political age points to 39.4 percent (US$3.65/day 2017 reflecting larger interest payments with uncertainty surrounding upcoming elec- PPP) in FY23, with 12.5 million more poor higher domestic interest rates and the tions. With the resumption of growth, Pakistanis relative to FY22. Poverty rose de- weaker currency. poverty is expected to decline to 37.2 per- spite government efforts, including a 25 per- Overall, the economic contraction, high in- cent in FY24. The current account deficit is cent increase in cash payments under the Be- flation, and flood-related devastation af- projected to gradually widen to 1.5 percent nazir Income Support Program, a one-off fected poorer households disproportion- of GDP in FY25. targeted fuel subsidy, and payments to ately, leading to greater inequality, with Inflation is projected to remain high at 26.5 flood-affected families. the Gini index estimated to have increased percent in FY24 and moderate to 17.0 per- Reflecting lower remittances, sizeable debt by 1.5 points to 30.7 in FY23. Moreover, cent in FY25 amid high base effects and servicing payments, and no access to inter- the floods, which caused extensive damage lower global commodity prices. However, national capital markets, Pakistan’s external to public infrastructure, including schools the higher petroleum levy and energy tar- account weakened, with foreign reserves and clinics, coupled with maladaptive eco- iff adjustments will maintain domestic en- falling significantly, equivalent to just one nomic coping strategies such as removing ergy price pressures and contribute to month of total imports at the end of FY23. children from schools, have likely wors- growing social and economic insecurity. Reflecting the imposition of import controls ened disparities in human development Protracted and elevated food and energy to preserve reserves and a weaker currency, outcomes within and across regions. price inflation, in the absence of substantial the current account deficit shrank to a ten- growth, could cause social dislocation and year low, equivalent to 0.7 percent of GDP in have negative welfare impacts, especially FY23 from 4.7 percent in FY22. With large on the worse-off households with already debt repayments amid limited foreign in- Outlook depleted savings and reduced incomes. vestment, the financial account saw a deficit The fiscal deficit is forecasted to narrow for the first time since FY04. The official ex- Even with the SBA, reserves are expect- marginally, averaging 7.6 percent of GDP change rate depreciated by 28.6 percent ed to average less than one month of over FY24 and FY25, reflecting high-inter- against the U.S. dollar over FY23. total imports over FY24-FY25, necessitat- est payments. The primary deficit will re- In line with some fiscal consolidation and ing continued import controls and con- main modest at an average of 0.3 percent rapid nominal GDP growth, the prima- straining economic recovery. Real GDP of GDP, reflecting consolidation efforts. ry deficit narrowed to an estimated 0.8 growth is expected to only reach 1.7 Despite liquidity pressures, the public percent of GDP in FY23. The overall fis- percent in FY24, with tight fiscal and debt-to-GDP ratio is projected to decline cal deficit, however, is estimated to have monetary policy, persistent inflation, over the medium term. TABLE 2 Pakistan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019/20 2020/21 2021/22 2022/23e 2023/24f 2024/25f Real GDP growth, at constant market prices -1.3 6.5 4.7 -0.6 1.7 2.4 Private consumption -2.8 9.4 6.7 -1.0 1.9 2.6 Government consumption 8.5 1.8 -1.3 -7.2 1.9 2.8 Gross fixed capital investment -6.7 3.7 5.7 -17.8 0.8 2.2 Exports, goods and services 1.5 6.5 5.9 -8.6 0.7 2.0 Imports, goods and services -5.1 14.5 11.0 -17.8 1.7 3.2 a Real GDP growth, at constant factor prices -0.9 5.8 6.1 -0.6 1.7 2.4 Agriculture 3.9 3.5 4.3 1.0 2.2 2.4 Industry -5.7 8.2 6.8 -2.9 1.4 2.3 Services -1.2 5.9 6.6 -0.5 1.5 2.4 Inflation (consumer price index) 10.7 8.9 12.2 29.2 26.5 17.0 Current account balance (% of GDP) -1.5 -0.8 -4.7 -0.7 -1.4 -1.5 Net foreign direct investment inflow (% of GDP) 0.9 0.5 0.5 0.1 0.1 0.4 Fiscal balance (% of GDP) -7.0 -6.0 -7.8 -7.8 -7.6 -7.5 Revenues (% of GDP) 13.3 12.4 12.1 11.6 11.9 12.3 b Debt (% of GDP) 81.1 75.6 80.7 82.3 72.4 70.3 Primary balance (% of GDP) -1.5 -1.1 -3.1 -0.8 -0.4 -0.2 c,d International poverty rate ($2.15 in 2017 PPP) 5.9 4.5 3.6 6.8 7.4 6.8 c,d Lower middle-income poverty rate ($3.65 in 2017 PPP) 42.7 38.5 34.2 39.4 37.2 35.0 c,d Upper middle-income poverty rate ($6.85 in 2017 PPP) 85.4 84.3 82.2 83.9 82.5 81.2 GHG emissions growth (mtCO2e) 1.2 5.2 5.2 2.0 1.8 2.6 Energy related GHG emissions (% of total) 42.6 43.7 44.5 43.8 43.8 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/ The Government's provisional FY23 estimate of real GDP growth (at 2015-16 prices) is 0.3 percent. b/ Prior to FY22, public debt does not include Central Bank deposits and bilateral SWAP liabilities. c/ Calculations based on SAR-POV harmonization, using 2018-HIES. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025. d/ Poverty projections based on microsimulations using 2018-HIES and aggregate macroeconomic indicators (see Caruso et al 2017). MPO 15 Oct 23 policy, debt, and public financial manage- ment. In March 2023, the IMF approved SRI LANKA Key conditions and a 48-month Extended Fund Facility of ap- proximately US$3 billion to support the challenges government’s reform program, which was followed by budget support from develop- Table 1 2022 Sri Lanka’s longstanding structural weak- ment partners, including the World Bank. Population, million 22.2 nesses were elevated by several shocks, Debt restructuring discussions with exter- GDP, current US$ billion 74.4 which ultimately plunged the country in- nal creditors are ongoing. The Parliament GDP per capita, current US$ 3348.0 to an economic crisis. Poor governance, approved a domestic debt restructuring a 1.0 International poverty rate ($2.15) a restrictive trade regime, a weak in- strategy in July 2023, which excluded fi- a 11.3 vestment climate, episodes of loose mon- nancial sector-held government securities Lower middle-income poverty rate ($3.65) a 49.3 etary policy, and an administered ex- issued under domestic law. Upper middle-income poverty rate ($6.85) Gini index a 37.7 change rate contributed to macroeconom- School enrollment, primary (% gross) b 100.3 ic imbalances. Fiscal indiscipline led to b 76.4 high fiscal deficits and large gross financ- Life expectancy at birth, years Total GHG emissions (mtCO2e) 45.8 ing needs, which, together with risky Recent developments commercial borrowing, elevated debt vul- Source: WDI, Macro Poverty Outlook, and official data. nerabilities. Ill-timed tax cuts in 2019 fur- The economy contracted by 7.8 percent a/ Most recent value (2019), 2017 PPPs. b/ WDI for School enrollment (2020); Life expectancy ther eroded weak fiscal buffers and led to (y-o-y) in 2022 and 7.9 percent (y-o-y) in (2021). a rapid growth in debt to unsustainable 1H 2023. Construction, manufacturing, re- levels. As Sri Lanka lost access to interna- al estate, and financial services suffered tional financial markets in 2020 and offi- the most amid shrinking private credit, cial reserves dropped precipitously there- shortages of inputs, and supply chain dis- The economy has shown initial signs of after, the forex liquidity constraint ul- ruptions, worsening the negative welfare timately led to severe shortages of es- impacts of income contractions and job stabilization, albeit at a low-level equi- sential goods in 2022. The country an- losses registered in 2022. Headline in- librium, with moderating inflation, eas- nounced an external debt service suspen- flation, measured by the Colombo Con- ing foreign exchange liquidity pressures, sion in April 2022, pending debt restruc- sumer Price Index, peaked at 69.8 percent and some progress in debt restructur- turing. Amid the crisis, half a million (y-o-y) in September 2022 and subse- jobs were lost, food insecurity and mal- quently declined sharply to 4 percent (y- ing. However, the path to recovery re- nutrition increased, poverty doubled, and o-y) in August 2023 from a high base mains narrow, with limited fiscal and inequality widened. amid subdued demand. Decelerating in- external buffers. A successful debt re- The government is implementing structur- flation was beneficial for households’ wel- structuring and continued implementa- al reforms to regain macroeconomic stabil- fare, and helped limit further increases tion of structural reforms remain essen- ity and a sustainable growth path, includ- in food insecurity and malnutrition, espe- ing cost-reflective utility pricing, revenue- cially among poor households. tial to restore stability and put the The central bank began to loosen monetary enhancing measures, trade, investment, country back on a sustainable growth SOE, and social protection reforms. Key policy as inflation decelerated. Policy rates and poverty reduction path. legislation is being enacted on monetary were cut by 250 basis points in June 2023 FIGURE 1 Sri Lanka / Net foreign assets of the banking FIGURE 2 Sri Lanka / Actual and projected poverty rates system and real GDP per capita USD million Poverty rate (%) Real GDP per capita (constant LCU) 2000 80 700000 1000 70 600000 0 60 500000 -1000 50 400000 -2000 40 300000 -3000 30 200000 -4000 20 -5000 10 100000 -6000 0 0 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 -7000 International poverty rate Lower middle-income pov. rate Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Upper middle-income pov. rate Real GDP pc Sources: Central Bank of Sri Lanka and World Bank staff calculations. Source: World Bank. Notes: see Table 2. MPO 16 Oct 23 and by a further 200 basis points in July, higher total revenues and, consequently, to decline in 2023, the overall balance will bringing the Standing Deposit Facility rate a near closing of the primary deficit. remain high due to the large interest bill. down to 11 percent and the Standing While some of the necessary fiscal re- Debt restructuring and a revenue-based Lending Facility rate to 12 percent. Sup- forms, including new revenue measures, fiscal consolidation are projected to reduce ported by policy rate cuts and better clarity have improved overall progressivity, in- the overall balance in the medium-term. on domestic debt restructuring, the 91-day direct taxes, and rising energy prices are While recent macroeconomic performance T-bill rates fell below 20 percent in July placing a disproportionate burden on the has been better than expected, downside 2023 (for the first time since April 2022). poor and vulnerable. Unless mitigated risks remain high, given a narrow path Between January and July 2023, the mer- with targeted measures, the removal of to recovery and limited buffers. A pro- chandise trade deficit contracted by US$1 energy subsidies could lead to further longed or insufficiently deep external billion (y-o-y), driven by import restric- poverty increases. debt restructuring, a deterioration in the tions and subdued import demand (pri- political situation (including a backlash marily for intermediate and investment to the reforms), inadequate domestic rev- goods), despite the reduction in exports enue mobilization, limited external fi- driven by weak global demand. Foreign Outlook nancing support, a sharper global slow- exchange liquidity pressures are easing down, and a prolonged recovery from the due to the absence of large debt service Growth prospects depend on progress scarring effects of the crisis are key risks payments, strong remittance flows, and with debt restructuring and the implemen- to restoring stability, regaining a sustain- improved tourism earnings, leading to an tation of growth-enhancing structural re- able growth path, and bringing Sri Lanka accumulation of usable foreign reserves forms. Inflation is projected to stay in sin- back to pre-crisis rates of poverty. The fi- to US$2.4 billion by end-July 2023 (equiv- gle digits amid weak demand, as mone- nancial sector needs continuous monitor- alent to 5-6 weeks of imports of goods tization of fiscal deficits wanes. Further, ing, given high exposures to the public and services). Stronger remittance flows monetary loosening and exchange rate sector, rising non-performing assets, and contributed to higher non-labor income, pressures could counter this trend. Poverty tight liquidity conditions. although it also reflected an increase in is projected to increase in 2023 before de- The necessary macroeconomic adjust- emigration since the start of the crisis. Af- clining over the medium term, in line with ments may initially adversely affect ter depreciating by 81 percent against the the slow recovery. Despite the removal of growth, poverty, and inequality, but will US Dollar in 2022, the currency (LKR) ap- import restrictions, the current account correct overall imbalances, help regain ac- preciated by 11 percent from January to deficit is expected to narrow further in cess to international financial markets, August of 2023. 2023, due to continued liquidity con- and build the foundation for sustainable The overall fiscal deficit increased in the straints, and remain benign thereafter with growth. Mitigating the impacts on the first four months of 2023, driven by a the recovery in tourism and remittances. poor and vulnerable remains critical dur- sharp rise in interest payments, despite Although the primary deficit is expected ing the adjustment. TABLE 2 Sri Lanka / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2020 2021 2022 2023e 2024f 2025f a Real GDP growth, at constant market prices -4.6 3.5 -7.8 -3.8 1.7 2.4 Private consumption -5.8 2.6 -9.0 -4.1 1.9 2.5 Government consumption 0.0 -2.8 1.4 -2.6 -1.7 0.9 Gross fixed capital investment -7.9 6.3 -22.8 -4.4 2.0 3.1 Exports, goods and services -29.6 10.1 10.2 -4.3 2.8 3.1 Imports, goods and services -20.1 4.1 -19.9 -4.6 1.5 2.8 a Real GDP growth, at constant factor prices -2.9 4.0 -6.7 -3.8 1.7 2.4 Agriculture -0.9 0.9 -4.6 0.8 1.5 1.5 Industry -5.3 5.7 -16.0 -5.8 1.6 2.4 Services -1.9 3.5 -2.0 -3.4 1.8 2.5 Inflation (consumer price index) 4.6 6.0 46.4 17.9 5.9 5.9 Current account balance (% of GDP) -1.4 -3.7 -5.3 -1.0 -0.9 -0.7 Net foreign direct investment inflow (% of GDP) 0.5 0.7 1.2 1.1 1.1 1.2 b,c International poverty rate ($2.15 in 2017 PPP) 1.6 1.5 5.8 6.6 6.5 6.3 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) 12.7 13.1 25.0 27.9 27.5 26.8 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) 49.9 51.1 65.0 67.9 67.6 67.0 GHG emissions growth (mtCO2e) 4.8 9.7 5.1 -10.2 0.2 1.4 Energy related GHG emissions (% of total) 65.5 68.3 70.2 66.5 66.4 66.6 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ GDP by expenditure for 2020 and 2021 are estimates, as the data published on March 15, 2023 by authorities only included GDP by production. b/ Calculations based on SAR-POV harmonization, using 2019-HIES. Actual data: 2019. Nowcast: 2020-2022. Forecasts are from 2023 to 2025. c/ Projection using neutral distribution (2019) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 17 Oct 23 Macro Poverty Outlook 10 / 2023