South Asia is regaining its economic momentum, but the recovery in the world’s region with the largest number of poor people could falter in the absence of a stronger investment climate, said the latest South Asia Economic Focus report of the World Bank.

According to the report, the combined growth of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka was just 4.7% in 2012, substantially below pre-crisis levels.  A pick-up to 5.5% can be expected in 2013 with ongoing efforts to regain fiscal space and boost private investment.  But given the uncertain global environment, it will be important to strengthen the investment climate.

“How countries manage their economies in the face of uncertainties in the global environment will be critical not only for addressing near-term current account and fiscal deficits but also for tackling South Asia’s long-term challenges,” said Martin Rama, chief economist for the South Asia Region at the World Bank.