South Asia Eyes 6.9% Economic Growth Driven by AI and Reform

The regional outlook faces cooling trends by 2027, with growth projected to slide to 6.7%. Persistent energy costs and the looming threat of severe El Niño weather patterns—which could devastate agricultural output—remain primary concerns. Johannes Zutt, World Bank Vice President for South Asia, emphasized that sustaining this momentum requires shifting toward new growth engines, specifically by integrating workforce training with infrastructure investment to capitalize on global AI value chains.

AI adoption is currently gaining traction but remains uneven. Roughly 23% of Indian firms utilize AI, a figure that pales in comparison to the 43% adoption rate seen in the United States. Franziska Ohnsorge, the World Bank’s Chief Economist for South Asia, noted that the potential for AI extends beyond corporate efficiency to public sector transformation. Successful implementations, such as AI-driven weather forecasting for Indian farmers and retinal screening in Bangladesh, demonstrate that technology can bridge critical gaps in education, healthcare, and rural support where skilled labor is in short supply.

To bridge the digital divide, the report advocates for a strategy focused on foundational capacity. Governments must prioritize digital infrastructure, accessible skills training, and regulatory frameworks that ensure data privacy without stifling local innovation. By lowering barriers for small businesses and tailoring AI tools to operate on limited connectivity, the region can move beyond experimental use cases toward systemic economic growth.