South Asia Macro Poverty Outlook Country-by-country Analysis and Projections for the Developing World Spring Meetings 2022 © 2022 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 Group, 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 22 AFGHANISTAN Key conditions and Recent developments challenges Official GDP statistics are not being pro- duced. Economic output is expected to Afghanistan is experiencing a worsen- decline by between 20-30 percent over the ing fiscal, macroeconomic, and finan- year from August 2021. According to a re- cial sector crisis. The sudden cessa- cent private sector survey, firms have laid Economic conditions continue to deterio- tion of international grants (previously off more than half of their staff on aver- rate following the political crisis of Au- equivalent to 45 percent of GDP and age. More than one third of small busi- financing 75 percent of public expen- nesses have temporarily or permanently gust 2021. Cessation of international diture) has caused a collapse in pub- closed operations, while more than three- grant support is driving a major collapse lic spending and aggregate demand. quarters of large companies report de- in aggregate demand, difficult macroeco- Many frontline public service workers creased demand for their outputs. nomic adjustments, and disruptions to remain unpaid. Declines in aid and Despite reduced incomes and domestic de- service delivery. Disruption to interna- government spending have under- mand, prices have increased rapidly. mined private sector activity, especial- Headline y-o-y inflation reached 12.7 per- tional financial relationships, the freezing ly in the aid-driven services sector cent in December reflecting depreciation, of the central bank’s overseas assets, and which has accounted for a large pro- increasing international prices, and import loss of confidence in the banking system is portion of output and growth since constraints arising from disruptions to in- driving a financial sector crisis. Renewed 2001. Loss of grant inflows has also ternational transactions. Food inflation left a shortage of hard currency with reached 17.7 percent, reflecting heavy re- international support for humanitarian which to finance imports (Afghanistan liance on imported wheat. More recent da- activities and basic service delivery is was heavily dependent imports for ta collected by the World Food Program now underway, but a broader program of critical items including food, fuel, and shows y-o-y inflation for a basket of basic action will be required for economic stabi- electricity, with a trade deficit equal household goods reaching 42 percent in to around 35 percent of GDP). the first week of February. lization and eventual recovery. Afghanistan’s offshore central bank as- According to official data, goods imports sets have been frozen, undermining declined by around 47 percent over the the capacity of the central bank to second half of 2021 relative to the same smooth the required macroeconomic period in 2020, in line with contracting adjustment, while international bank- domestic demand, disruptions to interna- ing relationships have been heavily tional payments, and the central bank’s disrupted due to international sanc- loss of access to overseas assets. Import tions and associated Anti-Money contraction was broad-based, reflecting Laundering (AML) concerns. These lower imports for all categories of goods. factors combined with a shortage of Recent data from the Pakistan authorities both USD and AFN cash notes have show imports from Pakistan in January triggered a crisis of confidence in the 2022 were only around one-third of 2021 banking sector, crippling cash short- levels. Goods exports, on the other hand, ages, and severe disruptions to domes- declined only moderately over the second tic and international payments, with half of 2021 (4.7 percent lower than dur- severe impacts on the private sector ing the same period in 2020). Positive im- and humanitarian agencies. Disrup- pacts of improved security and deprecia- tions to the banking sector are par- tion were offset by the closure of aid-sub- ticularly impairing the operations of sidized air corridors for agricultural ex- businesses that rely on formal financial ports to India and China. flows to import necessary inputs, plac- The Afghani has depreciated against most ing their ongoing viability at risk. major trading currencies since August, re- Rapidly deteriorating economic conditions flecting the decline in aid inflows and in the context of severe drought are dri- heightened uncertainty. The Afghani fell ving a humanitarian crisis. Afghans are by 14 percent against the USD, 10 percent suffering from rapidly increasing unem- against the Euro, and 4 percent against the ployment, deepening impoverishment, Pakistani Rupee between the end-July 2021 and worsening food insecurity. A and mid-February 2022. The market value largescale international humanitarian re- of the AFN is being buoyed by a tightening sponse is being mobilized, while efforts are of the domestic money supply driven by underway to restore international devel- shortages of AFN banknotes and recent in- opment support to critical service delivery jections of USD cash through humanitari- functions. Dysfunction of the financial sec- an cash shipments. tor, however, continues to both constrain The abrupt cessation of aid inflows and the effective mobilization of aid support difficult economic conditions are driving and limit prospects for economic stabiliza- a significant fiscal contraction, with public tion and recovery. spending expected to decline by around MPO 3 Apr 22 75 percent. All development and security leading to a reduction from 10 to five per- services, including health, education, aid has ceased (previously equal to around cent in the share of households receiving re- food security, and community develop- US$8.5 billion per year), leaving only rela- mittances. Extreme poverty had led to the ment, to be delivered through off-budget tively limited humanitarian flows. The in- widespread adoption of harmful coping channels. In the context of financial sector terim administration collected US$ 0.5 bil- mechanisms such as reducing food con- dysfunctions, USD cash shipments man- lion between September-December 2021 – sumption, borrowing at high interest rates aged by the United Nations are provid- around half of revenue collections over the and the sale or consumption of assets. This ing a vital source of funding for human- same period in 2019. In its quarterly bud- will have long-term consequences given itarian activities and an important source get (December 21-March 21), the interim Afghanistan’s very young population. of USD liquidity. administration plans spending equal to All parties acknowledge, however, that around only 50 percent of 2019 levels, with current provision of humanitarian and the budget including ambitious revenue basic services assistance is unsustainably projections and a significant unfinanced Outlook expensive and cannot substitute for a deficit (equal to around US$60 million).1 functioning economy and private sector Recent indicators of monetary poverty are Afghanistan’s economic outlook is stark. (current humanitarian needs exceed pre- not available, but a recent household sur- Under any scenario, Afghanistan will face vious levels of civilian aid assistance). vey shows that living conditions have de- a smaller economy, significantly higher Economic stabilization or medium-term teriorated and food insecurity has wors- rates of poverty, and more limited eco- recovery would require: i) restoration of ened since August 2021. 70 percent of nomic opportunities for the 600,000 core financial sector functions, includ- households report insufficient incomes to Afghans reaching working age every year. ing effective operation of the central meet basic food and non-food needs (com- Human development outcomes are likely bank; ii) sound economic management; pared to about 35 percent reported for May to deteriorate in the context of substantial iii) restoration of confidence; and iv) 2021). A substantial decline in labor earn- disruptions to basic services and increased maintenance of adequate security con- ings and destruction of employment in the poverty. The Russian invasion of Ukraine, ditions. Such progress would likely re- public and private sectors are driving in- war, and associated sanctions may have quire coordinated action between the in- creased unemployment and increased in- significant exacerbating impacts via in- ternational community and the interim formal and casual work. The economic cri- creased prices for imported food and fuel. administration, including in relation to sis is also weakening safety nets, with dis- Recent moves by the international commu- the utilization of frozen assets, provision ruptions to international financial flows nity will mitigate human impacts. The of technical assistance support for eco- United Nations is mobilizing a largescale nomic management, and measures to humanitarian response to reach more than restore international banking relation- 1/ The quarterly budget includes large cuts to security 24 million Afghans at a total cost over ships. Meanwhile, the world bank con- and development project allocations, while maintaining CY2022 of US$4.4 billion. The international tinues to provide analytical support to allocations for recurrent health and education expendi- tures at close to previous levels. It remains unclear community is also working towards re- inform international community on en- whether the budget will be effectively implemented. newed development assistance for basic gagement priorities. MPO 4 Apr 22 the negative impacts of the pandemic, in- cluding relatively low debt. A stimulus BANGLADESH Key conditions and program protected productive capacity in the manufacturing sector, while monetary challenges policy was accommodative. Downside risks to the outlook persist and Table 1 2021 GDP has grown rapidly over the past two external risks remain elevated. The war in Population, million 166.3 decades, supported by a demographic div- the Ukraine may contribute to rising com- GDP, current US$ billion 415.3 idend, sound macroeconomic policies, and modity prices (oil, natural gas, fertilizer, GDP per capita, current US$ 2497.0 an acceleration in readymade garment grains), which could increase the current a 14.3 International poverty rate ($1.9) (RMG) exports. Job creation and remit- account deficit. Fiscal expenditures on sub- a 52.3 tance inflows contributed to a sharp de- sidies may rise, depending on the extent Lower middle-income poverty rate ($3.2) a 84.2 cline in poverty. However, the pace of job of price adjustments, which may also in- Upper middle-income poverty rate ($5.5) Gini index a 32.4 creation and poverty reduction has slowed crease inflationary pressure. New waves of School enrollment, primary (% gross) b 119.6 since 2013, even as GDP growth acceler- COVID-19 could necessitate additional b 72.6 ated. Persistent structural weaknesses in- movement restrictions, hampering domes- Life expectancy at birth, years clude low institutional capacity, highly tic economic activity. Although not fully Total GHG Emissions (mtCO2e) 247.0 concentrated exports, growing financial reflected in official data due to continued Source: WDI, Macro Poverty Outlook, and official data. sector vulnerabilities, unbalanced urban- regulatory forbearance, the pandemic has a/ Most recent value (2016), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy ization, and a business climate that lags deepened longstanding financial sector (2019). peer economies. Bangladesh is also highly vulnerabilities, including high levels of vulnerable to the effects of climate change. non-performing loans (especially in state- After graduation from the UN’s Least De- owned banks) and weak capital buffers. After decelerating to 3.4 percent in FY20, veloped Country status in 2026, real GDP growth rebounded to 6.9 per- Bangladesh will begin to lose preferential access to advanced economy markets. cent in FY21. While pandemic disrup- Bangladesh’s economy performed well Recent developments tions are waning, GDP growth is project- during the pandemic compared to peer ed to decelerate moderately to 6.4 percent countries. The lockdown negatively im- High frequency macroeconomic indicators in FY22 with higher commodity prices. pacted the work status of approximately point to a continued recovery in July-De- half the population. High frequency phone cember 2021 (H1 FY22) as COVID-19 in- Poverty is expected to decline modestly. survey data collected in mid-2021 under- fections moderated and global economic Downside risks include commodity price score the disproportionate impact of growth accelerated. On the demand side, volatility, new waves of COVID-19, and COVID-19 job losses on women. However, merchandise exports rose by 28.4 percent worsening financial sector vulnerabilities. restrictions were progressively less strin- (y-o-y) in H1 FY22 as RMG exports re- Addressing longstanding structural chal- gent with each wave of COVID-19, includ- bounded strongly. Imports of consumer, ing the omicron variant, and economic ac- capital, and intermediate goods rose by lenges could accelerate the post- 52.4 percent over the same period, as the tivity gradually recovered from an initial COVID-19 recovery and support longer contraction. Bangladesh entered the pan- recovery accelerated. On the supply side, term development objectives. demic with adequate buffers to mitigate the industrial production index shows 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 (millions constant LCU) 15 100 200000 90 180000 10 80 160000 70 140000 5 60 120000 50 100000 0 40 80000 -5 30 60000 20 40000 -10 10 20000 2000 2003 2006 2009 2012 2015 2018 2021 2024 0 0 Gov. cons. Exports GFCF 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 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 estimates. Sources: World Bank. Notes: see Table 2. MPO 5 Apr 22 strong growth in manufacturing, while reserves remained adequate at US$ 46.1 economic disruptions related to the services growth was supported by a de- billion in December 2021, or 6.7 months COVID-19 pandemic are waning, a sharp cline in COVID-19 movement restrictions. of imports. increase in commodity prices and rising Modest agricultural growth was sustained, The estimated fiscal deficit moderated to uncertainty in European export markets with no major flooding events. 3.6 percent of GDP in FY21, as revenues are expected to weigh on growth. Inflation rose to 6.1 percent in December outpaced expenditure growth. Tax rev- Notwithstanding these challenges, GDP 2021, driven by rising global commodity enues increased by 16.8 percent (y-o-y) in growth is expected to remain resilient in prices, and upward adjustments in ad- H1 FY22, primarily supported by trade-re- FY23, supported by a recovery in invest- ministered prices of gas and diesel. lated taxes on rising imports. Estimated ex- ment, and strong domestic demand. In- Bangladesh Bank (BB) maintained its ex- penditure increased due to higher subsidy flation is projected to reach 6.2 percent pansionary monetary policy stance since payments in the energy and agriculture in FY22, with a high degree of uncer- the beginning of the pandemic. Following sectors. Deficit financing from the banking tainty in FY23 due to commodity price a downward trend in FY21, private sector sector increased, as the sale of National volatility. Official remittance inflows are credit growth accelerated modestly to Savings Certificates (NSCs) declined due expected to grow in FY23, as higher oil 11.1 percent (y-o-y) by January 2022 but to stringent application of eligibility regu- prices underpin demand for workers in remained below the 14.8 percent target lations and a reduction in NSC rates. the GCC. This, in turn, is likely to reduce set by the BB. The COVID-19 pandemic has put the sub- the current account deficit. The current account deficit reached US$ 8.2 stantial poverty reduction gains of the past The fiscal deficit is projected to remain billion in H1 FY22, compared to a surplus of two decades at risk. After rising during the within the government’s 5.0 percent of US$ 3.5 billion in the same period of FY21. COVID-19 pandemic, estimated poverty GDP target. Gradual revenue growth The rising deficit was driven by a 55.4 per- declined to 11.9 percent in FY21, using the will be supported by rising imports and cent increase in imports and a 20.9 percent international poverty rate ($1.9 in 2011 PPP). modest policy reforms, expenditure decline in official remittance inflows, as the A gradual reduction in poverty is projected growth will be led by infrastructure use of informal payment channels resumed to continue, reaching 11.3 percent in FY22. spending. To sustain GDP growth over with relaxation of international travel re- the medium term, longstanding struc- strictions. The balance of payment deficit tural challenges must be addressed, in- reached US$ 1.8 billion in H1 FY22, com- cluding increasing domestic revenues, pared to a surplus of US$ 6.1 billion over the Outlook modernizing the tariff regime, resolving same period of FY21. The interbank ex- sector vulnerabilities, and improving the change rate depreciated modestly to 86.0 GDP growth is expected to decelerate business climate. BDT/US$ in January 2022. Foreign exchange modestly to 6.4 percent in FY22. While TABLE 2 Bangladesh / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2018/19 2019/20 2020/21 2021/22e 2022/23f 2023/24f Real GDP growth, at constant market prices 7.9 3.4 6.9 6.4 6.7 6.9 Private Consumption 4.9 3.0 8.0 7.9 5.9 5.8 Government Consumption 13.4 2.0 6.9 7.7 8.3 8.8 Gross Fixed Capital Investment 6.9 3.9 8.1 8.4 7.7 8.1 Exports, Goods and Services 11.5 -17.5 9.2 25.5 5.8 6.8 Imports, Goods and Services 0.5 -11.4 15.3 28.8 5.7 5.6 Real GDP growth, at constant factor prices 8.0 3.8 7.0 6.4 6.7 6.9 Agriculture 3.3 3.4 3.2 3.2 3.5 3.6 Industry 11.6 3.6 10.3 10.4 10.2 9.9 Services 6.9 3.9 5.7 4.3 4.9 5.3 Inflation (Consumer Price Index) 5.5 5.6 5.6 6.2 6.0 5.8 Current Account Balance (% of GDP) -1.3 -1.5 -1.1 -4.0 -3.5 -3.2 Net Foreign Direct Investment (% of GDP) 0.7 0.3 0.3 0.4 0.5 0.6 Fiscal Balance (% of GDP) -4.7 -4.8 -3.6 -4.1 -4.0 -3.5 Debt (% of GDP) 28.5 31.7 32.1 32.8 33.2 33.1 Primary Balance (% of GDP) -3.0 -2.9 -1.5 -2.1 -1.9 -1.4 a,b International poverty rate ($1.9 in 2011 PPP) 12.1 12.5 11.9 11.3 10.8 10.3 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 48.2 49.0 47.8 46.8 45.7 44.7 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 82.3 82.7 82.1 81.6 81.1 80.6 GHG emissions growth (mtCO2e) 5.8 2.5 3.1 3.8 4.1 4.2 Energy related GHG emissions (% of total) 40.6 41.4 42.3 43.7 45.1 46.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on SAR-POV harmonization, using 2010-HIES and 2016-HIES.Actual data: 2016. Nowcast: 2017-2021. Forecasts are from 2022 to 2024. b/ Projection using annualized elasticity (2010-2016) with pass-through = 1 based on GDP per capita in constant LCU. MPO 6 Apr 22 $3.20 poverty rate from 11.0 percent in 2019 to 12.6 percent in 2021. BHUTAN Key conditions and The short term outlook is largely depen- dent on the speed of return to economic challenges normalcy, and the efficacy of fiscal sup- port, both through COVID-19 relief mea- Table 1 2021 Economic growth had been strong prior sures (which includes a partial interest Population, million 0.8 to the COVID-19 pandemic, fueled by the waiver on loans and temporary income GDP, current US$ billion 2.4 public sector-led hydropower sector and support to individuals directly affected GDP per capita, current US$ 3069.5 strong performance in the services sector, by the pandemic) and the scale up of a 1.5 International poverty rate ($1.9) including tourism. Annual real GDP capital expenditures. Addressing vulner- a 12.2 growth averaged 7.5 percent since the abilities in the financial sector is crucial, Lower middle-income poverty rate ($3.2) a 38.9 1980s, and the poverty rate dropped from as pressures on asset quality are likely to Upper middle-income poverty rate ($5.5) Gini index a 37.4 36 percent to 12 percent from 2007 to 2017, increase once the forbearance measures School enrollment, primary (% gross) b 105.8 based on the $3.20/day poverty line. While are phased out. Other risks include de- b 71.8 the hydro sector has provided a reliable lays in hydro projects (the generation ca- Life expectancy at birth, years source of growth, it did not create many pacity is expected to double in the medi- Total GHG Emissions (mtCO2e) -5.5 jobs, which remain concentrated in agri- um term with the completion of four pro- Source: WDI, Macro Poverty Outlook, and official data. culture and the public sector. Growth con- jects), which would have significant im- a/ Most recent value (2017), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy straints related to the country’s unique ge- pacts on growth, fiscal revenues, and ex- (2019). ographic and economic characteristics, in- ports. The economic impact from the war cluding high trade costs and a small do- in Ukraine on Bhutan will likely be felt mestic market, have limited competitive- through higher energy and food prices, Output is estimated to have contracted by ness of non-hydro sectors. as direct trade with Russia and Ukraine 3.7 percent in FY20/21, with broad based Bhutan has achieved mass vaccination is negligible. (almost 90 percent of its adult total pop- contractions in the non-hydro industrial ulation has received a booster dose by and services sector, reflecting early March 2022), and managed to con- COVID-19-related disruptions. The fiscal tain the virus, despite a recent surge Recent developments deficit has increased to 6.3 percent in in cases due to the Omicron variant. However, the government’s strict ze- The economy has further contracted by FY20/21 due to fiscal measures to support ro-COVID policy has significantly con- 3.7 percent in FY20/21 (July 2020 to July livelihoods and the recovery of the econo- strained livelihoods and economic ac- 2021), after a negative growth of 2.4 per- my, amid subdued revenue performance. tivity in the non-hydro industrial and cent in FY19/20. The industry sector con- Poverty is expected to have increased with services sectors, as stringent social and tracted by 5.5 percent, despite positive the economic contraction translating into mobility restrictions – including for in- growth in the hydro sector. Construction, bound tourism and foreign workers – manufacturing, and mining sectors were lower household incomes. adversely affected by foreign labor short- remained in place. This has had a direct impact on worker earnings and con- ages and high input prices. Services sec- tributed to an increase in the estimated tor output fell by 2.2 percent, as the FIGURE 1 Bhutan / Fiscal indicators FIGURE 2 Bhutan / Actual and projected poverty rates and real GDP per capita Billion LCU Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 80 Total revenues and grants (lhs) 4 70 100000 Total expenditures (lhs) 90000 70 Fiscal Balance (rhs) 2 60 80000 60 50 70000 0 50 60000 40 40 -2 50000 30 40000 30 -4 30000 20 20 20000 -6 10 10 10000 0 -8 0 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 International poverty rate Lower middle-income pov. rate Upper middle-income pov. rate Real GDP pc Source: Ministry of Finance and World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 7 Apr 22 tourism industry remained largely inactive in spending was driven by COVID-19 re- and the resulting increase in exports, as in FY20/21. On the demand side, private lief measures (6.6 percent of GDP), as well well as a recovery in non-hydro industries investment and consumption contracted as an increase in capital expenditures. Rev- and the services sector. Inflation is project- sharply due to domestic COVID-19 con- enues also increased, but to a lesser extent, ed to remain elevated in the short and tainment measures and lower incomes. driven by hydro profit transfers from the medium term, owing to continued supply Average inflation moderated from 8.2 per- on-streaming of Mangdechhu (4.2 percent disruptions and higher energy and com- cent in FY20/21 to 6.0 percent in the first of GDP). Tax revenues declined in FY20/21, modity prices. half of FY21/22, driven by a slowdown in reflecting the slowdown in the non-hydro The CAD is expected to remain low rela- food inflation. However, non-food infla- economy. Public debt increased to 134.9 tive to pre-COVID levels, and to moderate tion remains high, reflecting higher fuel percent of GDP in FY20/21 (up from 123 further in the medium term due to a sharp and transport prices, and food inflation percent in FY19/20). However, risks to debt increase in electricity exports and a grad- has picked up in line with price develop- sustainability remain moderate as the bulk ual decline in hydro-related imports after ments in India. of the debt is linked to hydro project loans the completion of projects. The current account deficit (CAD) has fur- from India (to be paid off from future hy- The fiscal deficit is expected to increase to ther narrowed to 11.8 percent of GDP in dro revenues) with low refinancing and ex- 10.1 percent of GDP in FY21/22 due to the FY20/21, driven by a smaller trade deficit change rate risks. scale up in capital expenditures and sub- than in FY19/20. Goods exports (as a share dued revenue performance, including a of GDP) increased, supported by an in- decline in hydro profit transfers, and crease in hydro exports and trade facilita- would then decline to 7.4 percent of GDP tion measures for non-hydro goods, main- Outlook in FY22/23 as pandemic-related fiscal mea- ly mineral products and base metals. sures are gradually phased out. Domestic Goods imports also increased compared to The economy is expected to grow by 4.4 revenues are expected to increase over the FY19/20, but to a lesser extent, as private percent in FY21/22, supported by Bhutan’s medium term, supported by hydro rev- investment projects, including hydro con- rapid vaccination campaign, the easing of enues and policies aimed at mobilizing struction, remained subdued. The services mobility restrictions, and ongoing fiscal non-hydro revenues, including the intro- deficit deteriorated further, reflecting the support. On the demand side, public in- duction of the Goods and Services Tax standstill in tourism-related services in vestment and a recovery in domestic and (GST) in FY22/23. Public debt is projected FY20/21. Gross international reserves external demand (in particular from India) to remain elevated as a share of GDP in the stood at US$1.6 billion in November 2021, underpin growth. Output is expected to short term due to high fiscal deficits. equivalent to 19.5 months of goods and return to pre-pandemic levels in FY22/23 The $3.20 poverty rate is expected to de- services imports. with a gradual recovery in tourism and a cline from 2021 onwards, although a full The fiscal deficit widened to 6.3 percent in pick up in services sector growth. In the recovery to poverty headcount rates esti- FY20/21, reflecting fiscal support and sub- medium term, growth will be driven by mated before the pandemic is not likely to dued revenue performance. The increase the new hydro plants coming on stream be achieved until 2023. TABLE 2 Bhutan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2018/19 2019/20 2020/21 2021/22e 2022/23f 2023/24f Real GDP growth, at constant market prices 4.4 -2.4 -3.7 4.4 4.7 6.7 Private Consumption 10.3 -0.5 -3.5 4.0 2.5 2.0 Government Consumption 7.0 7.3 24.0 -5.6 -11.4 2.8 Gross Fixed Capital Investment -11.2 -15.2 -18.6 19.1 3.0 2.1 Exports, Goods and Services 9.6 -4.1 -1.2 5.2 20.7 20.8 Imports, Goods and Services 0.0 -9.2 -2.1 8.9 3.8 6.7 Real GDP growth, at constant factor prices 4.6 -0.8 -2.6 4.4 4.7 6.7 Agriculture 2.7 2.9 5.7 3.5 3.5 3.5 Industry -1.6 -5.6 -5.5 7.5 5.4 11.9 Services 11.1 2.6 -2.2 2.3 4.3 3.2 Inflation (Consumer Price Index) 2.8 3.0 8.2 7.3 5.5 3.9 Current Account Balance (% of GDP) -20.5 -12.4 -11.8 -11.4 -9.5 -5.2 Fiscal Balance (% of GDP) -1.6 -1.9 -6.3 -10.1 -7.4 -4.5 Debt (% of GDP) 106.5 123.0 134.9 134.6 131.4 128.1 Primary Balance (% of GDP) -0.7 -1.5 -5.3 -8.3 -5.8 -2.2 a,b International poverty rate ($1.9 in 2011 PPP) 1.3 1.4 1.6 1.5 1.3 1.1 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 11.0 11.6 12.6 11.9 11.2 10.2 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 37.0 38.1 39.7 38.6 37.4 35.7 GHG emissions growth (mtCO2e) -0.2 1.6 1.5 -2.0 -1.8 -3.8 Energy related GHG emissions (% of total) -15.6 -15.1 -14.4 -15.2 -16.0 -17.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. a/ Calculations based on SAR-POV harmonization, using 2007-BLSS, 2019-, and 2017-BLSS.Actual data: 2017. Nowcast: 2018-2021. Forecasts are from 2022 to 2024. b/ Projection using average elasticity (2007-2019) with pass-through = 1 based on GDP per capita in constant LCU. MPO 8 Apr 22 consumer spending further, localized stress in the financial sector following the INDIA Key conditions and withdrawal of regulatory forbearance, moderating global growth and the emer- challenges gence of new ‘variants’ of COVID-19 ne- cessitating stringent restrictions on activity Table 1 2021 The growth recovery in FY22 was driven vis-a-vis those witnessed in recent months. Population, million 1393.4 by a strong growth in investment and a GDP, current US$ billion 3085.4 rebound in private consumption. The eco- GDP per capita, current US$ 2214.3 nomic impact of the surging COVID-19 in- School enrollment, primary (% gross) a 99.9 fections in January-February 2022 (the Recent developments a 69.7 ‘third wave’) was much less pronounced, Life expectancy at birth, years Total GHG Emissions (mtCO2e) 3254.9 in contrast to the deep contraction in FY21 The economy expanded by 8.3 percent in Source: WDI, Macro Poverty Outlook, and official data. due to the national lockdown. The recov- FY22 following a contraction of 6.6 percent a/ WDI for School enrollment (2020); Life expectancy ery has been strong but not broad-based. in FY21. On the demand side, private con- (2019). Restrictions on activity and sectoral nature sumption was supported by the release of of the crisis have hampered the income pent-up demand post the ‘second wave’ prospects of low-income households, un- and investment was spurred by increased skilled labor, and the informal sector. government capital spending. Imports in- Growth was driven mainly by investment, creased more than exports, leading to a underpinned by a targeted fiscal stimulus, negative contribution from trade in FY22. The rebound in FY22 was strong despite as well as the exports of services. Latest da- On the supply side, mining and manufac- the two ‘waves’ of COVID-19, support- ta shows that the economy expanded by turing sectors benefited from the global ed by increased vaccination coverage. 5.4 percent in the third quarter (October- rally in commodity prices and robust ex- The recovery, however, is not broad December) of FY22. ternal demand. The services sector ex- based with private consumption growth The focus of fiscal policy shifted from panded but remained below the pre-pan- mitigating the socio-economic impact of demic level due to slower recovery in con- constrained by subdued income and em- COVID-19, towards increasing capital tact-intensive segments. ployment. Investment strengthened due spending to facilitate the recovery by Headline inflation averaged above the to the government’s capex push and ac- crowding-in private investment and bol- midpoint of the tolerance range (2-6 per- commodative financing conditions. How- stering revenue to facilitate gradual fiscal cent) at 5.5 percent in FY22 due to cost- consolidation. Despite rising inflationary push pressures from higher commodity ever, growth is expected to moderate in pressures, the RBI has indicated contin- prices and supply disruptions. Although FY23 due to rising inflation, supply dis- uation of the accommodative monetary the RBI maintained an accommodative ruptions stemming from intensifying policy stance. stance, it has undertaken steps towards geo-political tensions, and moderating Major headwinds to growth in FY23 in- gradual policy normalization by pausing global growth outlook. clude persistently elevated inflation— ex- the government securities acquisition acerbated by rising oil and commodity program and rebalancing liquidity from prices and supply disruptions following the overnight to term money market. The the conflict in Eastern Europe— denting financial sector remained resilient with FIGURE 1 India / Real GDP growth and contributions to real FIGURE 2 India / Real GDP GDP growth Percent, percentage points INR billion 15 190,000 Forecast Forecast 180,000 10 170,000 5 160,000 150,000 Real GDP (in 0 140,000 FY 2021-22) surpasses 130,000 pre-pandemic -5 FY 2019-20 120,000 -10 110,000 2016 2017 2018 2019 2020 2021 2022 2023 2024 100,000 Private Consumption Government Consumption Gross Fixed Investment Net Exports 90,000 Others Real GDP, y-o-y percent 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Sources: National Statistics Office (NSO) and World Bank staff calculations. Sources: National Statistics Office (NSO) and World Bank staff calculations. Note: 2014 refers to the fiscal year 2014-15 (FY15) and so on. Note: 2014 refers to the fiscal year 2014-15 (FY15) and so on. MPO 9 Apr 22 improvement in the performance and as- July 2021. Unemployment rates declined to in the financial sector, government initia- set quality of banks, especially the public 7.4 percent (monthly average) over July tives including the production linked in- sector banks. 2021-Feb 2022, from 12 percent in May 2021, centive scheme and improvement of the The current account balance was in mod- but it has been accompanied by workers investment climate will support invest- est deficit of 0.2 percent in Q1-Q2 FY22 as transitioning into lower-paying and less-se- ment. Despite this, surging commodity import growth outpaced export growth, cure jobs. Labor force participation has de- prices, renewed supply disruptions and despite the buoyant exports of computer clined from an average of 42.8 percent in heightened business uncertainty can delay and professional services. Further, robust 2019, to 40 percent through 2021.1 a sustainable pickup in private investment. foreign investment inflows and RBI inter- Inflation is expected to rise on the back vention in the foreign exchange market, of elevated crude oil and commodity resulted in a record high accumulation of prices and extended global supply dis- foreign exchange reserves of USD 622 bil- Outlook ruptions, with upside risks stemming lion by mid-March 2022 (15 months of from faster passthrough of elevated input FY21 imports). Real GDP is expected to grow at 8.0 costs to consumer prices. Intensifying in- The general government fiscal deficit, after percent in FY23, facing headwinds from flationary pressures may lead to sooner- peaking at 13.3 percent in FY21, declined geopolitical tensions in Eastern Europe. than-expected tightening of monetary to 10.9 percent in FY22 driven by stronger The recovery in private consumption will policy in FY23. growth in revenue vis-à-vis expenditure. be constrained by the incomplete recov- The current account deficit will widen sub- The capital expenditure of the union gov- ery in the labor market, and inflationary stantially as merchandise trade deficit in- ernment grew by 27 percent y-o-y over pressures weighing on households’ pur- creases on the back of rising commodity Q1-Q3 FY22, while current spending in- chasing power. Increased government prices and a resumption of, albeit slow, do- creased at a relatively modest pace (8 per- capital spending (especially in infrastruc- mestic recovery and will be only partially cent). Consequently, public debt declined ture and logistics), reduced vulnerabilities offset by resilient services exports. Capital to 86.9 percent of GDP in FY22 from 88.6 flows, especially foreign direct investment percent in FY21. inflows, are expected to remain steady— After the ‘second wave’, India’s labor mar- 1/ Data from Consumer Pyramids Household Survey given the reforms implemented to improve ket experienced a partial recovery starting (2019-2022). the business environment. TABLE 2 India / 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 3.7 -6.6 8.3 8.0 7.1 6.5 Private Consumption 5.2 -6.0 7.9 8.1 7.1 7.1 Government Consumption 3.4 3.6 1.5 8.1 7.0 7.9 Gross Fixed Capital Investment 1.6 -10.4 12.9 10.2 8.3 8.5 Exports, Goods and Services -3.4 -9.2 21.7 6.2 10.8 8.2 Imports, Goods and Services -0.8 -13.8 33.2 9.2 11.4 12.3 Real GDP growth, at constant factor prices 3.8 -4.8 7.6 8.0 6.8 6.5 Agriculture 5.5 3.3 3.1 4.0 3.8 3.6 Industry -1.4 -3.3 9.8 6.7 6.8 6.7 Services 6.3 -7.8 7.7 9.9 7.7 7.1 Inflation (Consumer Price Index) 4.8 6.2 5.5 5.5 4.9 4.2 Current Account Balance (% of GDP) -0.9 0.9 -1.2 -2.5 -2.0 -1.7 Net Foreign Direct Investment (% of GDP) 1.5 1.6 1.6 1.5 1.6 1.6 Fiscal Balance (% of GDP) -7.2 -13.3 -10.9 -9.6 -8.5 -8.0 Debt (% of GDP) 73.7 88.6 86.9 86.5 85.8 85.0 Primary Balance (% of GDP) -2.5 -7.8 -5.4 -3.8 -2.7 -2.1 GHG emissions growth (mtCO2e) 1.8 -10.5 6.7 5.2 4.0 3.3 Energy related GHG emissions (% of total) 70.9 67.8 69.0 70.2 71.1 71.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. MPO 10 Apr 22 large investments through external non-con- cessional sources and sovereign guarantees MALDIVES Key conditions and has contributed to growing fiscal and debt vulnerabilities, which are unlikely to dimin- challenges ish given significant public investments are expected to continue due to government’s Table 1 2021 Tourism is the main driver of economic commitment to completing these projects be- Population, million 0.5 growth, fiscal revenues, and foreign ex- forethe2023presidentialelections. GDP, current US$ billion 4.9 change earnings in Maldives. After the GDP per capita, current US$ 8977.8 COVID-19 outbreak in March 2020, Mal- a 1.7 Upper middle-income poverty rate ($5.5) dives closed its borders for three months, Gini index a 29.3 which severely hit the sector. Only 555,494 Recent developments b 98.0 tourists visited in 2020, a third of the 2019 School enrollment, primary (% gross) Life expectancy at birth, years b 78.9 level. Following a nationwide vaccination A recovery in tourism has led to a strong Total GHG Emissions (mtCO2e) 2.6 campaign that commenced in February economic rebound since Q2 2021. Real 2021, over two-thirds of the population have GDP grew from a low base by over 70 per- Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2019), 2011 PPPs. now been fully vaccinated. This supported a cent (y-o-y) in Q2 and Q3 2021. Notably, b/ Most recent WDI value (2019). stronger recovery in tourism in the second Maldives received over 1.3 million tourists half of 2021, with total arrivals reaching 1.3 in 2021, which was about 80 percent of million by the end of the year. However, a 2019 levels. Despite a new wave of high dependence on tourism and limited COVID-19 infections due to the Omicron Following the recovery in 2021, Mal- sectoral diversification remains a key struc- variant, the growth momentum has con- tural challenge as the country is highly vul- tinued into 2022. Tourist arrivals were 43 dives is projected to grow at 7.6 per- nerable to external and macroeconomic and 54 percent above 2021 levels in Janu- cent in 2022, and fully recover to pre- shocks. Disruptions stemming from the ary and February 2022, respectively. pandemic output levels by 2023. This pandemic and shocks due to the Russia- Along with the economic recovery and will be supported by a sustained recov- Ukraine war highlight the risks associated higher global commodity prices, headline with reliance on a single economic sector. inflation rose slightly to 0.5 percent in ery in tourism, assuming increasing ar- Additional long-standing structural weak- 2021, from deflation of 1.4 percent in 2020. rivals from traditional markets, such as nesses also remain. To promote faster This was driven by increases in transport, China and Western Europe, which will growth, the government has rightly scaled food, housing, water, electricity, gas, and partially offset any fall in Russian and up infrastructure investments since 2016. other fuel prices. This has helped boost construction activity, The current account deficit narrowed to an Ukrainian tourists. Despite a narrow- productivity growth, and medium-term estimated US$1.1 billion (21.7 percent of ing of the fiscal deficit, public debt will growth prospects. Investments in physical GDP) in 2021 from US$1.3 billion (35.5 per- remain unsustainable. and social infrastructure have also led to a cent of GDP) in 2020, as exports surged by reduction in poverty, with only 1.7 percent about 97 percent and exceeded the 59 per- of the population estimated to be living be- cent growth in imports. The official gross re- low the poverty line (5.5 PPP USD/person/ serves remained stable at above US$800 mil- day) in 2019. However, financing of these lion (2.5 months of imports) for most of 2021. FIGURE 1 Maldives / Visitor arrivals FIGURE 2 Maldives / Actual and projected poverty rates and real GDP per capita Number of tourist arrivals Poverty rate (%) Real GDP per capita (constant LCU) 180000 12 180000 160000 160000 140000 10 140000 120000 8 120000 100000 100000 80000 6 80000 60000 4 60000 40000 40000 20000 2 20000 0 0 0 -20000 2019 2021 2023 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Upper middle-income pov. rate Real GDP pc 2016-2018 2019 2020 2021 2022 Sources: Ministry of Tourism and World Bank staff calculations. Sources: HIES 2019/20 and World Bank POVMOD projections. MPO 11 Apr 22 Tourism-linked revenues rose alongside real GDP is expected to grow at 7.6 per- revenue mobilization measures (particu- the recovery in tourism, with total revenues cent in 2022, and at 9.9 percent in 2023 larly the introduction of new departure and grants amounting to US$631 million in supported by: (i) greater tourism capac- taxes and an increased Airport Develop- Q2 and Q3 2021, which was only 15 percent ity due to the completion of the Velana ment Fee). Despite a narrowing of the fis- below 2019 levels. Given that expenditures airport expansion and new resorts; (ii) a cal deficit, public debt levels will remain grew by 12 percent (y-o-y) in Q2 and Q3 return of Chinese tourists following the high and unsustainable. 2021, with capital expenditure only picking reopening of their border; and (iii) con- Downside risks persist. The baseline pro- up in Q3 2021, the fiscal deficit is estimated tinued capital expenditures and election- jection accounts for the estimated impacts to have narrowed to 17.7 percent of GDP in related spending. of the Russia-Ukraine war on tourism and 2021. Combined with the fast recovery in Inflation is projected to rise to 3.5 percent oil prices under the current trend, but fur- GDP growth, this led to a fall in public debt in 2022, but moderate in the medium term ther increases in global energy prices may from 146 percent of GDP in 2020 to a still un- as global energy prices normalize. Al- cause an additional fiscal burden. Tourism sustainable 129 percent in 2021. though service exports will increase as could be adversely impacted by a persis- After a sharp increase to 11 percent of the tourism recovers, the return to pre-pan- tent reduction in Russian and Ukrainian population in 2020, the poverty rate is esti- demic levels of consumption and capital tourists and new waves of COVID-19 in- mated to have fallen to 4 percent in 2021 due goods imports will lead to an expansion in fections. However, there is some upside to the economic recovery, and is expected to the current account deficit to a projected 24 potential for increasing tourist arrivals return to pre-pandemic levels by 2023. percent of GDP in 2023, before narrowing from traditional markets such as China in 2024 due to a fall in capital goods im- and Western Europe. ports as large investment projects are ex- Despite improving fiscal prospects, pru- pected to be completed by then. dent debt management remains critical to Outlook The fiscal deficit is projected to decline to improving fiscal sustainability and lower- 16 percent of GDP in 2022 and steadily ing the cost of growth-enhancing invest- Due to a continued recovery in tourism and narrow in the medium term as revenues ments, especially with large debt service other sectors impacted by the pandemic, improve due to tourism growth and new obligations coming due in 2026. TABLE 2 Maldives / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 6.9 -33.5 31.0 7.6 10.2 7.1 Private Consumption 4.4 -27.2 29.0 8.5 7.2 6.5 Government Consumption -4.3 5.4 6.5 7.1 7.8 11.2 Gross Fixed Capital Investment -2.6 -36.6 14.1 0.0 14.8 -2.6 Exports, Goods and Services 6.7 -51.4 69.6 12.1 10.2 8.5 Imports, Goods and Services -0.3 -41.1 50.0 10.2 9.3 6.0 Real GDP growth, at constant factor prices 6.9 -31.3 27.3 7.6 10.2 7.1 Agriculture -7.6 7.0 3.8 2.6 2.4 2.1 Industry 1.9 -25.4 -1.6 9.9 8.1 7.0 Services 8.6 -34.3 34.1 7.7 10.9 7.4 Inflation (Consumer Price Index) 0.2 -1.4 0.5 3.5 1.3 1.2 Current Account Balance (% of GDP) -26.6 -35.5 -21.7 -23.2 -23.9 -21.3 Net Foreign Direct Investment (% of GDP) 17.1 -11.8 9.0 12.5 13.9 12.8 Fiscal Balance (% of GDP) -6.7 -23.5 -17.7 -16.0 -13.9 -12.8 Debt (% of GDP) 78.8 146.1 128.8 130.9 129.6 129.2 Primary Balance (% of GDP) -4.9 -20.8 -14.0 -10.9 -9.2 -8.3 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 1.7 10.9 4.0 2.5 1.3 0.7 GHG emissions growth (mtCO2e) 3.3 3.1 3.1 3.0 3.1 2.8 Energy related GHG emissions (% of total) 81.5 81.5 81.5 81.5 81.6 81.6 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on SAR-POV harmonization, using 2019-HIES. Actual data: 2019. Nowcast: 2020-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2019) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 12 Apr 22 of activity in the services and industrial sectors. Growth in the agricultural sector NEPAL Key conditions and has been muted following a reduction in paddy production amid unseasonal rains challenges in October 2021. Average inflation accelerated from 3.4 per- Table 1 2021 Nepal has achieved an average growth cent in FY21 to 5 percent in H1FY22, re- Population, million 29.7 rate of 4.9 percent between FY09 and flecting higher transportation prices asso- GDP, current US$ billion 35.1 FY19 and attained lower middle-income ciated with global fuel price hikes and an GDP per capita, current US$ 1182.0 status in 2020. The country has reduced increased educational fees and housing a 15.0 International poverty rate ($1.9) poverty, thanks in large part to remit- prices. However, food price inflation a 50.9 tances inflows which averaged 21.9 per- slowed to 4.2 percent (year-on-year) in Lower middle-income poverty rate ($3.2) a 83.0 cent of GDP over the same period. Struc- H1FY22 from 4.6 percent in FY21, reflect- Upper middle-income poverty rate ($5.5) Gini index a 32.8 tural constraints to achieving inclusive ing a lower vegetable price increase. School enrollment, primary (% gross) b 142.1 and sustainable growth remain, including The current account deficit widened in b 70.8 a significant share of population in low- H1FY22 relative to H1FY21. Drivers in- Life expectancy at birth, years quality low-productivity jobs, high vul- clude a surge in imports and a drop in of- Total GHG Emissions (mtCO2e) 54.4 nerability to natural disasters and climate ficial remittance inflows, which in absolute Source: WDI, Macro Poverty Outlook, and official data. change, large infrastructure gaps, and terms far outpaced an increase in exports. a/ Most recent value (2010), 2011 PPPs. b/ Most recent WDI value (2019). highly concentrated trade markets. En- In the absence of significant FDI inflows, suring continued transition to a federal- the current account deficit was financed by ized system of governance and public fi- trade credits, external concessional bor- After an initial recovery in FY21, growth nance and managing the rising debt lev- rowing, and reserve drawdown. Official els, in recent years, through prudent fiscal gross foreign exchange reserves fell to momentum continued during H1FY22 management will be additional challenges USD 9.9 billion in mid-January 2022 (6.6 with progress in vaccination and ongoing that need to be managed. months of imports coverage) from USD COVID-19 related fiscal and monetary 11.8 billion in mid-July 2021. In response, support. Growth is expected to accelerate the central bank adopted measures to mit- igate pressure on reserves, including limit- in FY22 to 3.7 percent, weathering new Recent developments ing imports of luxury goods. variant waves and rising fuel prices. Going As observed in previous years, a federal forward, the economy is forecast to grow After growing 1.8 percent in FY21, the econ- fiscal surplus was recorded in H1FY22 as 4.1 and 5.8 percent in FY23 and FY24, re- omy maintained recovery momentum in revenue outstripped expenditure growth, spectively. Downside risks include new the first half of FY22 with increased interna- as the budget execution tends to accel- tional tourist arrivals and continued expan- erate in the last quarter of the fiscal COVID-19 variants, the severity of the sion of credit to the private sector. Signifi- year. Revenue expanded by 28 percent Russia-Ukraine conflict, and potentially cant progress on vaccination has allowed year-on-year in H1FY22 on the back of stronger import compression measures to Nepal to weather a renewed COVID-19 a strong recovery in trade-related taxes, support international reserves. wave in early 2022 with less stringent con- income taxes, and non-tax revenues es- tainment measures, supporting a rebound pecially with strong increase in royalties, FIGURE 1 Nepal / Real GDP levels: Actual vs. pre-covid trend FIGURE 2 Nepal / The current account deficit has widened Index of real GDP, FY2019=100 USD billion 140 10 Pre-covid 5 year GDP trend 120 5 Actual GDP 100 0 80 -5 60 -10 40 -15 FY16 FY17 FY18 FY19 FY20 FY21 H1FY22 20 Workers' remittances Balance of goods and services FY11 FY13 FY15 FY17 FY19 FY21 FY23 Current account balance Sources: World Bank staff projections and Nepal Central Bureau of Statistics. Sources: World Bank staff calculations and Nepal Rastra Bank. MPO 13 Apr 22 dividends, and passport and visa fee col- end of FY22 (81.7 percent of the population demand for migrant workers in the GCC lections. Compared to H1FY21, total ex- aged 18 and higher have received full dos- countries due to stronger economic perfor- penditure rose due to higher social secu- es of vaccine by March 25, 2022); and (iii) a mance driven by higher oil prices. Larg- rity spending and intergovernmental fis- gradual increase in international migration er current account deficits are expected to cal transfers to sub-national governments, and tourist arrivals, reaching pre-pandem- be financed primarily by concessional bor- while capital expenditure remained close ic levels by FY24. rowing and moderate drawdown on re- to H1FY21 levels. While public debt has The baseline forecast projects a gradual serves, while FDI is assumed to remain risen from 22.7 percent to 41.8 percent of medium-term recovery, with growth accel- marginal as a funding source. GDP from FY17 to FY21, the risk of debt erating from 3.7 percent in FY22 to 5.8 per- The fiscal deficit is projected to narrow to distress is currently assessed as low as cent by FY24. Vaccination deployment is 3.7 percent of GDP in FY22 as growth re- per the Joint Bank-Fund Debt Sustainabil- expected to unleash pent-up demand for bounds continue to support revenue col- ity Analysis of December 2021. most service sub-sectors. Industry sector lection. Over the medium-term, the fiscal New analysis based on the World Bank growth is projected to be supported by in- deficit is projected to further narrow grad- COVID-19 phone monitoring survey (con- creased production of hydropower includ- ually, supported by expected rollback of ducted during the later half of 2020) shows ing from the recently completed Upper COVID-19 related tax breaks and modest that 45 percent of those who recovered Tamakoshi plant. Agricultural growth is policy reforms. Total public debt is project- from a job loss have switched sectors and projected to decelerate in FY22, reflecting ed to peak at 44.5 percent of GDP in FY24. taken jobs with lower earnings and skill a decline in paddy production and the rise The economic outlook is subject to down- requirements. This indicates that many of global fertilizer prices earlier in the fiscal side risks. A major uncertainty is the households have been pushed to margin- year. Increasing fuel prices are expected to speed of booster dose deployment and ally above or below the poverty line. New weigh on aggregate demand. vaccine effectiveness to stop transmission data on jobs and recovery from January Inflation is expected to rise to 6 percent of a new COVID-19 variant. The out- 2022 will help better understand the im- during FY22 reflecting higher global com- comes of local elections in May 2022 and pacts of the COVID-19 on the labor mar- modity prices. From FY22 to FY24, annual federal and provincial elections in FY23 kets and its welfare implications. Higher inflation is expected to average 5.6 percent. will pose additional political uncertainty. inflation will increase the cost of basic The current account deficit is projected to Risks on the external side stem from in- needs, which will adversely impact the widen to 11.9 percent of GDP in FY22 and creasing pressure on reserves driven by poor and vulnerable, although this may be begin to narrow after. Imports are expect- the increasing imports. partially mitigated by rising remittances. ed to peak at 43.1 percent of GDP in FY22, Stronger import control measures to mit- driven by resurgent consumption and in- igate pressures on international reserves creased commodity prices. Merchandise could affect growth through lower trade- exports are projected to grow from a low related tax revenues, depressed private Outlook base as Nepal continues to take advantage consumption and production, and lower of tariff exemptions under the South Asian capital expenditures. The ongoing Russia- The baseline scenario assumes: (i) that no Free Trade Area agreement and expands Ukraine conflict, if it deepens further, new nationwide strict containment mea- electricity exports to India. Remittances are could lower travel demand and may sures are imposed; (ii) a near complete vac- projected to average 21.8 percent of GDP threaten the recovery of tourism and cination of the eligible population by the over the medium term, assuming stronger tourism related sectors. TABLE 2 Nepal / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 6.7 -2.1 1.8 3.7 4.1 5.8 Private Consumption 8.1 3.6 2.4 2.1 1.9 2.5 Government Consumption 9.8 3.8 -5.0 23.6 0.8 -4.1 Gross Fixed Capital Investment 11.3 -12.4 1.2 7.6 5.5 9.6 Exports, Goods and Services 5.5 -15.9 -19.8 30.7 12.5 15.1 Imports, Goods and Services 5.8 -15.2 16.9 10.2 2.3 3.1 Real GDP growth, at constant factor prices 6.4 -2.1 1.8 3.7 4.1 5.8 Agriculture 5.2 2.2 2.7 1.3 1.8 2.3 Industry 7.4 -3.7 0.9 5.1 5.3 6.9 Services 6.8 -4.0 1.6 4.7 5.0 7.4 Inflation (Consumer Price Index) 4.6 6.1 3.4 6.0 5.7 5.2 Current Account Balance (% of GDP) -6.9 -0.9 -8.1 -11.9 -9.5 -6.8 Fiscal Balance (% of GDP) -5.0 -5.3 -4.6 -3.7 -3.5 -3.4 Debt (% of GDP) 27.2 36.3 41.8 43.1 44.2 44.5 Primary Balance (% of GDP) -4.5 -4.7 -3.7 -2.8 -2.5 -2.3 GHG emissions growth (mtCO2e) 1.3 -2.3 0.8 1.0 1.3 2.3 Energy related GHG emissions (% of total) 42.7 40.5 39.5 39.1 38.9 39.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. MPO 14 Apr 22 PAKISTAN Key conditions and Recent developments challenges Indicators have mostly signaled positive economic momentum over July-December Table 1 2021 Since imposing a widespread lockdown in 2021 (H1 FY22). With continued improve- Population, million 225.2 response to the first COVID-19 wave, Pak- ment in community mobility and still ro- GDP, current US$ billion 345.5 istan has been effectively using localized bust official remittance inflows, private GDP per capita, current US$ 1534.3 lockdowns to curb the infection spread, al- consumption is estimated to have a 3.6 International poverty rate ($1.9) lowing economic activity to largely contin- strengthened. Similarly, investment is also a 34.4 ue. Expansion of the national cash trans- expected to have increased with strong Lower middle-income poverty rate ($3.2) a 77.6 fer program, a mass vaccination campaign, growth of machinery imports and govern- Upper middle-income poverty rate ($5.5) Gini index a 29.6 accommodative macroeconomic policies, ment development expenditure. Govern- School enrollment, primary (% gross) b 95.5 and supportive measures for the financial ment consumption also grew strongly b 67.3 sector, all helped mitigate the adverse ef- with vaccine procurement. On the produc- Life expectancy at birth, years fects of the pandemic. As a result, growth tion side, agricultural output, mainly rice Total GHG Emissions (mtCO2e) 469.2 of real GDP at constant factor 2015-16 and sugarcane increased, reflecting better Source: WDI, Macro Poverty Outlook, and official data. prices rebounded to 5.6 percent in FY21, weather conditions. Similarly, large-scale a/ Most recent value (2018), 2011 PPPs. b/ Most recent WDI value (2019). after contracting by 1.0 percent in FY20. manufacturing growth rose to 7.5 percent Nevertheless, long-standing structural y-o-y in H1 FY22, higher than the 1.5 per- weaknesses of the economy and low pro- cent for H1 FY21. In contrast, business and After a definitive economic recovery in ductivity growth pose risks to a sustained consumer confidence have fallen since recovery. Strong aggregate demand pres- June 2021, partly due to concerns about FY21, Pakistan’s GDP growth is expected sures, in part due to previously accom- higher inflation and interest rates. to slow in FY22 and FY23 due to macroeco- modative fiscal and monetary policies, Headline inflation rose to an average of nomic challenges emanating on both do- paired with the continued less conducive 9.8 percent y-o-y in H1 FY22 from 8.6 per- mestic and external fronts. Symptomatic of external environment for exports have cent in H1 FY21, driven by surging glob- contributed to a record-high trade deficit al commodity prices and a weaker ex- the long-standing structural issues associ- (Figure 1), weighing on the Rupee and the change rate. Similarly, core inflation has ated with low potential growth, the record- country’s limited external buffers. been increasing since September 2021. Ac- high trade deficit and double-digit infla- Macroeconomic risks are strongly tilted to cordingly, the State Bank of Pakistan has tion, require urgent macroeconomic ad- the downside. They include faster-than-ex- been unwinding its expansionary mone- justment measures. The ongoing pandem- pected tightening of global financing con- tary stance since September 2021, raising ditions, further increases in world energy the policy rate by a cumulative 275 basis ic, a protracted surge in global commodity prices, and the possible risk of a return points (bps) and banks’ cash reserve re- prices, and faster-than-expected tighten- of stringent COVID-19 related mobility re- quirement by 100 bps. ing of global financing conditions pose sub- strictions. Domestically, political tensions The current account deficit (CAD) in H1 stantial risks to the outlook. and policy slippages can also lead to pro- FY22 widened to US$9.0 billion, from a tracted macroeconomic imbalances. surplus of US$1.2 billion in H1 FY21, as FIGURE 1 Pakistan / Headline inflation and overall trade FIGURE 2 Pakistan / Actual and projected poverty rates and deficit real GDP per capita Percent US$ Billion Poverty rate (%) Real GDP per capita (constant LCU) 14 5 100 200000 Trade Deficit (rhs) 4.5 90 180000 12 Inflation (lhs) 4 80 160000 10 3.5 70 140000 60 120000 3 8 50 100000 2.5 40 80000 6 2 30 60000 4 1.5 20 40000 1 10 20000 2 0 0 0.5 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 0 0 International poverty rate Lower middle-income pov. rate Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Upper middle-income pov. rate Real GDP pc Sources: Pakistan Bureau of Statistics and State Bank of Pakistan. Source: World Bank. Notes: see Table 2. MPO 15 Apr 22 imports values surged by 54.4 percent, complement the tighter monetary policy, is expected to slow to 4.3 percent in FY22 doubling the 27.3 percent growth in ex- the Government approved a Supplemen- and to 4.0 percent in FY23. However there- ports values. Double-digit growth in re- tary Finance Bill in January 2022, with- after, economic growth is projected to re- mittances in H1 FY22 helped to finance drew tax exemptions, and cut back on fed- cover to 4.2 percent in FY24, supported by the record-high trade deficit. The financial eral development spending, while protect- the implementation of structural reforms account recorded net inflows of US$10.1 ing social sector spending. to support macroeconomic stability and billion, supported by the new IMF SDR With the economic recovery and im- dissipating global inflationary pressures. allocation, short-term Government de- proved labor market conditions, poverty Inflation is estimated to rise to 10.7 percent posits from Saudi Arabia, and a Eu- measured at the lower middle-income in FY22 but moderate over the forecast robond issuance in July 2021. In January- class poverty line of $3.20 PPP 2011 per horizon. Largely reflecting the imports February, the Government obtained day is estimated to have declined from surge in H1 FY22, the CAD is expected US$2.1 billion from International Sukuks 37.0 percent in FY20 to 34.0 percent in to widen to 4.4 percent of GDP in FY22. and the IMF Extended Fund Facility FY21 (Figure 2). Rising food and energy Macroeconomic adjustment measures and (EFF). Despite these inflows, foreign ex- inflation is expected to diminish the real the weaker currency are expected to tame change reserves had fallen to US$13.5 bil- purchasing power of households, dispro- imports mostly in FY23. The CAD is ex- lion by March 25, 2022, equivalent to portionally affecting poor and vulnerable pected to narrow to 3.0 percent of GDP in 2.0 months of imports of goods and ser- households that spend a larger share of FY24, as reforms to reduce import tariffs vices. Meanwhile, the Rupee depreciated their budget on these items. In response, and the anti-export bias of trade policy by 14.3 percent against the U.S. dollar the Government introduced a targeted gain traction. The fiscal deficit (including from July 2021 to end-March 2022. food subsidies program (Ehsaas Rashan grants) is projected to widen slightly to 6.2 Despite the high tax revenue growth with Riyat) in February 2022. percent of GDP in FY22, and gradually the surge in imports, the fiscal deficit narrow over the medium term as revenue widened by 20.6 percent in H1 FY22 due to mobilization measures, particularly GST higher spending on vaccine procurement, harmonization and personal income tax re- settlement of power sector arrears, and de- Outlook form, take hold. Public debt as a share of velopment projects. Public debt, including GDP is projected to stay high, but to grad- guaranteed debt, reached 70.7 percent of On the back of high base effects, recent ually decline over the medium term. The GDP at end-December 2021, compared to macroeconomic adjustment measures outlook is predicated on the IMF-EFF pro- 72.0 percent at end-December 2020. To and stronger inflation, real GDP growth gram remaining on-track. TABLE 2 Pakistan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2018/19 2019/20 2020/21 2021/22e 2022/23f 2023/24f a,b Real GDP growth, at constant market prices 2.5 -1.3 6.0 4.3 4.0 4.2 Private Consumption 5.6 -3.1 6.3 5.5 3.0 3.9 Government Consumption -1.6 8.4 3.1 6.9 6.0 3.8 Gross Fixed Capital Investment -11.1 -5.5 6.8 4.4 2.5 4.4 Exports, Goods and Services 13.2 1.5 4.8 7.1 1.8 2.8 Imports, Goods and Services 7.6 -5.1 5.5 12.1 -0.7 2.1 a Real GDP growth, at constant factor prices 3.1 -1.0 5.6 4.3 4.0 4.2 Agriculture 0.9 3.9 3.5 3.6 3.2 3.3 Industry 0.2 -5.8 7.8 4.0 3.3 3.8 Services 5.0 -1.3 5.7 4.7 4.5 4.7 Inflation (Consumer Price Index) 6.8 10.7 8.9 10.7 9.0 7.5 Current Account Balance (% of GDP) -4.2 -1.5 -0.6 -4.4 -3.1 -3.0 Net Foreign Direct Investment (% of GDP) 0.4 0.9 0.5 0.6 0.8 0.9 Fiscal Balance (% of GDP) -7.8 -7.0 -6.1 -6.2 -6.0 -5.2 Debt (% of GDP) 78.0 81.1 76.0 76.0 74.4 72.5 Primary Balance (% of GDP) -3.0 -1.5 -1.1 -1.4 -1.0 -0.3 c,d International poverty rate ($1.9 in 2011 PPP) 3.6 4.3 3.4 3.0 2.7 2.3 c,d Lower middle-income poverty rate ($3.2 in 2011 PPP) 34.4 37.0 34.0 32.1 30.7 29.0 c,d Upper middle-income poverty rate ($5.5 in 2011 PPP) 77.6 79.0 77.3 76.3 75.3 74.0 GHG emissions growth (mtCO2e) 2.8 0.4 3.8 3.0 3.3 3.4 Energy related GHG emissions (% of total) 45.2 44.6 45.5 45.7 46.0 46.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Macroeconomic outlook as of February 2022. a/ Using re-based national accounts data at 2015-16 prices. b/ 2020/2021 expenditure accounts are World Bank estimates that conform to the production accounts of the new base year. c/ Calculations based on SAR-POV harmonization, using 2018-HIES.Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. d/ Projection using neutral distribution (2018) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 16 Apr 22 climate, restore competition, and support reforms to improve productivity in agri- SRI LANKA Key conditions and culture. Public investments and future borrowings should prioritize key sectors challenges and address immediate needs and induce sustainable and resilient growth through Table 1 2021 Due to the COVID-19 pandemic, the econ- economic transformation. Population, million 22.0 omy contracted by 3.6 percent in 2020, rais- GDP, current US$ billion 82.5 ing the $3.20 poverty rate to an estimated GDP per capita, current US$ 3750.2 11.7 percent. In 2021, an expeditious vacci- International poverty rate ($1.9) a 0.9 nation campaign contributed to economic Recent developments a 11.0 recovery. However, fiscal deficits sharply Lower middle-income poverty rate ($3.2) a 42.0 widened and public debt significantly in- Real GDP is estimated to have expanded Upper middle-income poverty rate ($5.5) Gini index a 39.3 creased due the pandemic and pre-pan- by 3.5 percent in 2021 thanks to a strong School enrollment, primary (% gross) b 100.2 demic tax cuts. Foreign exchange earnings 12.3 percent, year-on-year, rebound from a b 77.0 declined, while large international sover- low base in the second quarter of the year. Life expectancy at birth, years eign bond repayments came due. Height- Significant contributions came from man- Total GHG Emissions (mtCO2e) 36.7 ened fiscal and external risks led to a series ufacturing, financial services, construction, Source: WDI, Macro Poverty Outlook, and official data. of sovereign credit rating downgrades, transport, and real estate activity. Despite a/ Most recent value (2016), 2011 PPPs. b/ Most recent WDI value (2019). preventing market-based refinancing. Offi- still low tourism receipts, exports expand- cial reserves declined to critically low lev- ed significantly, led by the textile industry. els and a foreign exchange shortage has af- Higher imports of intermediate and capital fected the supply of some essentials. Inad- goods increased imports. The $3.20 pover- equate fuel supply for thermal generation ty rate is estimated to have slightly de- resulted in scheduled power cuts. clined to 10.9 percent in 2021, still above Sri Lanka faces unsustainable debt and Sri Lanka’s macroeconomic challenges are pre-pandemic levels. significant balance of payments chal- linked to years of high fiscal deficits, dri- Year-on-year inflation accelerated to 17.5 lenges. The economic outlook is highly ven primarily by low revenue collection, percent in February 2022, mostly due to and erosion of export competitiveness high food inflation at 24.7 percent, amid uncertain due to the fiscal and external due to a restrictive trade regime and rising global commodity prices, adjust- imbalances. Urgent policy measures are weak investment climate. Growth slowed ments to fuel prices, and partial moneti- needed to address the high levels of debt to an average 3.1 percent between 2017 zation of the fiscal deficit. Moreover, an and debt service, reduce the fiscal deficit, and 2019 from the 6.2 percent between agrochemical imports ban between May restore external stability, and mitigate the 2010 and 2016, as a peace dividend and and November reduced agricultural pro- a policy thrust toward reconstruction fad- duction. The increase in prices affected adverse impacts on the poor and vulnera- ed away and macroeconomic shocks ad- the ability of households to cover living ble. The forecasts have been finalized on versely impacted growth. Structural ad- expenses, leading to a deterioration of March 17, 2022. justments are needed to restore debt sus- welfare and more food insecurity. Since tainability, significantly increase revenue August 2021, the central bank has in- collection, and to improve the investment creased policy rates and the statutory 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) 4 70 500000 3 450000 60 400000 2 50 350000 1 40 300000 0 250000 30 200000 -1 20 150000 -2 100000 -3 10 50000 -4 0 0 2017 2018 2019 2020 2021e 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Agriculture Industry Services International poverty rate Lower middle-income pov. rate Net taxes Overall growth Upper middle-income pov. rate Real GDP pc Sources: Department of Census and Statistics, World Bank staff calculations. Sources: World Bank. Notes: see Table 2. MPO 17 Apr 22 reserve ratio by 200 basis points to mit- floated the currency on March 07 to prices, partially offset by gradually in- igate the pressures. stem reserve losses. By March 15, the cur- creasing remittances due to the float of the The trade deficit widened to USD 8.1 rency had depreciated by 31 percent. currency. Poverty at $3.20 per day is pro- billion in 2021 from USD 6 billion in The fiscal deficit is estimated to have re- jected to remain broadly unchanged from 2020 as a rising import bill offset the in- mained at 11.1 percent of GDP in 2021, 2021. A shortfall of external financing, crease in export earnings, despite import and public and publicly guaranteed debt larger than expected impacts of the Russia- restrictions on non-essential goods. De- to have increased to 117 percent of GDP. Ukraine War and associated sanctions on clines in remittances (22.7 percent) and The fiscal deficit was mostly financed by commodity prices and tourism, as well as tourism receipts (61.7 percent) are esti- domestic resources, including the central the possible emergence of new COVID mated to have further widened the cur- bank. Fitch, S&P, and Moody’s downgrad- variants pose downside risks. On the up- rent account deficit to USD 3.2 billion (or ed the sovereign rating deeper into the side, an opening of China could provide a 3.8 percent of GDP) in 2021. substantial risk investment category. boost to tourism. The government has mobilized external Sri Lanka needs to address the structural financing from bilateral partners, includ- sources of its vulnerabilities. This would ing a financial assistance package from require reducing fiscal deficits especially India worth US$ 1.4 billion in January Outlook through strengthening domestic revenue 2022 to pay for essential imports and mobilization. Fiscal consolidation needs to boost foreign exchange liquidity. A fur- The heightened fiscal and external risks as be accompanied by tighter monetary pol- ther US$ 1 billion support from India well as challenging political situation pose icy to contain pressures on inflation. Sri was signed on March 17, 2022. Howev- significant uncertainty to the economic out- Lanka also needs to find feasible options er, official reserves at US$ 2.3 billion in look and Sri Lanka faces an external financ- to restore debt sustainability. The financial February 2022 (equivalent to 1.3 months ing gap in 2022 and beyond. The real GDP sector needs to be carefully monitored of imports) remain low relative to for- growth outlook is subject to the continuing amid high exposure to the public sector eign currency debt service, estimated at fiscal and external imbalances. Despite ex- and the impact of the recent currency de- USD 5.6 billion from April to December pected further tightening of monetary poli- preciation on banks’ balance sheets. The 2022 (including domestic instruments is- cy, inflation will likely stay elevated, due the necessary adjustments may adversely af- sued in foreign currency). Net foreign recent currency depreciation and high com- fect growth and impact poverty initially assets of the banking system declined modity prices, partly related to the Russia- but will correct the significant imbalances, to US$ -4.9 billion in December 2021, Ukraine War and associated sanctions. The subsequently providing the foundation for showing escalating foreign exchange liq- fiscal deficit is projected to stay high amid stronger and sustainable growth and ac- uidity shortages. After keeping the ex- low revenue generation and rigid expendi- cess to international financial markets. change rate broadly fixed around 201 tures. The current account deficit is expected Mitigating the impacts on the poor and LKR/US$ for seven months, the CBSL toincreaseduetothehighglobalcommodity vulnerable would remain critical. TABLE 2 Sri Lanka / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 2.3 -3.6 3.5 2.4 2.3 2.3 Private Consumption 3.0 -3.0 3.6 2.3 2.2 2.4 Government Consumption 13.0 4.4 4.4 0.8 -1.3 -0.5 Gross Fixed Capital Investment 1.0 -9.5 5.8 2.3 1.0 1.5 Exports, Goods and Services 7.2 -9.6 18.2 8.9 5.8 2.8 Imports, Goods and Services -5.8 -11.4 15.7 5.9 2.2 1.3 Real GDP growth, at constant factor prices 2.2 -3.1 3.5 2.4 2.3 2.3 Agriculture 1.0 -2.4 3.0 1.0 1.5 1.5 Industry 2.6 -6.9 4.2 2.3 2.3 2.2 Services 2.2 -1.5 3.2 2.6 2.4 2.5 Inflation (Consumer Price Index) 4.3 4.6 6.0 15.2 8.3 6.1 Current Account Balance (% of GDP) -2.2 -1.3 -3.8 -4.3 -3.4 -2.9 Net Foreign Direct Investment (% of GDP) 0.7 0.6 0.8 1.1 1.3 1.3 Fiscal Balance (% of GDP) -9.6 -11.1 -11.1 -9.1 -9.6 -9.7 Debt (% of GDP) 94.3 109.7 117.0 122.7 124.3 125.4 Primary Balance (% of GDP) -3.6 -4.6 -4.6 -2.0 -2.0 -1.7 a,b International poverty rate ($1.9 in 2011 PPP) 0.7 1.2 1.0 1.0 1.0 1.0 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 9.5 11.7 10.9 10.8 10.8 10.7 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 39.3 42.3 40.9 40.8 40.7 40.6 GHG emissions growth (mtCO2e) -0.1 -4.0 3.1 2.7 2.4 2.4 Energy related GHG emissions (% of total) 63.8 64.4 65.7 67.0 67.9 68.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on SAR-POV harmonization, using 2016-HIES.Actual data: 2016. Nowcast: 2017-2021. Forecasts are from 2022 to 2024. b/ Estimates for 2017-2019 and 2021 use a neutral distribution (2016) and assume a medium pass-through (0.87) based on GDP per capita in constant LCU. Estimate for 2020 based on microsimulation of COVID19 impacts. Estimates for 2022-2024 assume a very low pass-through (0.10) based also on GDP per capita. MPO 18 Apr 22 Macro Poverty Outlook 04 / 2022