Reducing barriers to trade will boost the economic performance of the South Asia region, says a new World Bank report.
Despite the fastest growing region in the world, South Asia’s regional trade is only about 5 per cent of total trade, compared with 50 per cent in regions such as East Asia and the Pacific, the report, Glass Half Full: The Promise of Regional Trade in South Asia revealed.
High costs of trade are one of the main reasons: the average tariff in South Asia is more than double the world average.
More than one-third of the intraregional trade falls under sensitive lists, which are goods that are not offered concessional tariffs under the South Asian Free Trade Area (SAFTA).
While Pakistan and India collectively represent 88 per cent of South Asia’s Gross Domestic Product, trade between the two countries is only about a little over $2 billion.
“By reducing man-made trade barriers, trade within South Asia can grow roughly three times, from $23 billion to $67 billion,” said Sanjay Kathuria, World Bank Lead Economist and lead author of the report.
He pointed out that it was cheaper for Pakistan to trade with Brazil than with India.