Growth in South Asia is expected to increase to 6.4 percent this year, exceeding earlier projections and keeping the region on track to be the fastest growing in the world. Unlocking untapped potential by increasing women’s participation in the labor force and opening further to global trade and investment could help the region grow even faster and achieve its development goals, says the World Bank in its twice-yearly regional outlook.
Released today, the latest South Asia Development Update, Women, Jobs, and Growth forecasts a broad-based upturn in the region, supported by strong domestic demand in India and faster recoveries in most other South Asian countries. Growth is expected to remain robust at 6.2 percent a year for the next two years.
This forecast is subject to downside risks including extreme weather, debt distress, and social unrest. Policy missteps such as delays in planned reforms could also set the region back. Fragile fiscal and external positions leave little buffer against these risks.
“South Asia’s outlook is undoubtedly promising, but the region could do more to realize its full economic potential,” said Martin Raiser, World Bank Vice President for South Asia. “Key policy reforms to integrate more women into the workforce and remove barriers to global investment and trade can accelerate growth. Our research shows that raising female labor force participation rates in the region to those of men would increase regional GDP by up to 51 percent.”
Female labor force participation in South Asia is among the lowest in the world. Only 32 percent of working-age women were in the labor force in 2023, compared to 77 percent of working-age men in the region. For all South Asian countries except Bhutan, female labor force participation rates in 2023 were 5 to 25 percentage points lower than in countries at similar levels of development. This shortfall in the female labor force is most pronounced after marriage. On average, once married, women in South Asia reduce their participation in the workforce by 12 percentage points, even before they have children.
The shift toward service activities, usually associated with greater demand for female labor, has not yet led to higher levels of female employment in the region, and firms often state an explicit preference for male workers. Supply-side constraints such as childcare access, mobility and safety, legal restrictions, and conservative gender norms are also significant barriers.
“South Asia’s female labor force participation rate of 32 percent is well below the 54 percent average in emerging market and developing economies,” said Franziska Ohnsorge, World Bank Chief Economist for South Asia. “Increasing women’s employment requires action from all stakeholders. Our report recommends a multi-pronged effort where governments, the private sector, communities and households all have a role to play.”
The report’s recommendations include legal reforms to improve gender equality, measures to accelerate job creation, and removal of barriers to women working outside the home such as lack of safe transport and quality child and elder care. Such measures could be more effective if social norms became more accepting of female employment.
Another key area of reform is increasing trade openness. Most countries in South Asia rank among the least open to global trade and investment. This greatly limits the region’s ability to take advantage of the reshaping of global supply chains. Within the region, greater export orientation has been linked to greater female employment. Therefore, increased openness could help the region spur growth as well as boost job creation, especially for women.
