The projections in the October 2026 World Economic Outlook (WEO), published by the International Monetary Fund (IMF), indicate differing economic growth prospects among South Asian countries. In 2026, India and Bhutan are projected to grow by 7.0% each, followed by Sri Lanka at 4.0%, Bangladesh, Nepal, and Pakistan at 3.6% each, and the Maldives at 1.0%. Meanwhile, data for Afghanistan are not available in the indicator display used.

In 2027, India is projected to maintain growth of 7.0%, while Bhutan is projected to grow by 6.9%. The Maldives is expected to increase to 3.8%, Nepal and Sri Lanka to 3.7% each, Pakistan to 3.5%, and Bangladesh to 3.2%.

These differences show that countries within the same region do not necessarily enjoy the same growth momentum. Geographic proximity, shared development interests, and the existence of regional institutions do not automatically produce uniform economic performance.

In the context of global economic fragmentation, this issue is becoming increasingly important. Regional integration can expand markets, improve production efficiency, and strengthen supply chain resilience. However, these benefits depend on the ability of member countries to translate institutional commitments into tangible economic relationships.

Different Growth Engines

India occupies an important position because of its large domestic market, diversified economic base, and capacity to serve as a regional demand center. Strong growth has the potential to create trade and investment opportunities for neighboring countries. However, the size of India's economy does not automatically guarantee that its growth benefits will be distributed evenly throughout the region.

Bhutan is also projected to record high growth. Nevertheless, annual growth does not always reflect economic diversification, productivity, or resilience to external shocks. Meanwhile, the growth projections for Bangladesh, Nepal, Pakistan, and Sri Lanka indicate more moderate momentum. The Maldives is projected to experience an increase in growth in 2027 following low expansion in 2026.

These differences need to be interpreted carefully. GDP growth is not a direct measure of welfare, income distribution, or job quality. The main challenge for South Asia is not to equalize the growth rates of every country, but to build economic relationships that enable national growth to generate regional benefits.

Cohesion Without Integration

South Asia already has a framework for cooperation through the South Asian Association for Regional Cooperation (SAARC), established in 1985, and the South Asian Free Trade Area (SAFTA), signed in 2004 and effective from 2006. These two frameworks reflect the recognition that regional cooperation can expand market access and strengthen economic development. However, the existence of formal organizations and agreements does not automatically produce deep integration in trade, investment, transportation, energy, or production networks.

The World Bank has highlighted South Asia's limited trade integration relative to the region's potential. Trade barriers, connectivity constraints, and difficulties in relations between countries limit the region's ability to capitalize on its market. Thus, South Asia faces a gap between institutional cohesion and economic interdependence. Countries may have dialogue forums and common agreements, but cross-border economic activity does not necessarily develop in line with its potential. Formal cohesion does not automatically produce economic convergence.

Divergence and Risk of Fragmentation

Differences in growth do not automatically threaten regional cohesion. However, prolonged divergence can widen differences in policy priorities and development capacities among countries. Countries facing fiscal constraints and substantial development needs must allocate resources to infrastructure, job creation, economic stability, and public services. Meanwhile, countries with larger markets and greater financing capacity may have more room to develop technology, investment, and connectivity.

These differences can actually become a source of complementarity. Large markets can provide demand, while other countries contribute through specialization in industry, agriculture, energy, tourism, and services. However, these opportunities are difficult to realize if trade barriers and infrastructure constraints continue to limit cross-border economic relations.

Therefore, divergence is not merely a matter of differences in growth rates. The more fundamental issue is the unequal ability of member countries to benefit from regional integration opportunities. South Asia needs to strengthen the connection between institutional commitments and real economic activity. First, trade facilitation must be improved through the simplification of customs procedures and the reduction of non-tariff barriers. Second, transportation and energy connectivity must be developed to reduce trade costs and strengthen economic resilience.

Third, member countries need to promote regional value chains that connect suppliers, manufacturing industries, services, and consumer markets. Regulatory certainty, efficient payment systems, and a conducive investment environment are important prerequisites for attracting business participation.

Fourth, integration must take differences in economic capacity into account. Countries with larger markets can serve as centers of demand and production, while others can participate through sectors in which they have their own advantages. In this way, integration can not only expand regional economic activity but also create opportunities for its benefits to be distributed more widely.

Building Convergence from Cohesion

The October 2026 IMF WEO projections show that South Asia's growth prospects do not follow a uniform pattern. These differences are not a reason to abandon regional cooperation, but rather a basis for strengthening more inclusive and productive integration mechanisms.

The success of SAARC and SAFTA should not be measured solely by the existence of organizations or agreements. More substantive measures include increased intra-regional trade, cross-border investment, connectivity, and the ability of countries with different capacities to benefit from development.

Thus, South Asia's challenge is not merely to promote shared growth, but to build a regional economic architecture that enables growth to reinforce itself across countries. Without such efforts, the region risks maintaining institutional cohesion without adequate economic convergence. South Asia needs integration capable of transforming geographic proximity into connectivity, market potential into trade, and national growth into interconnected regional prosperity.

(The author is an Economist, Lecturer at STIES Mitra Karya Bekasi, Indonesia, and Business Practitioner. The views expressed are personal. He can be contacted at esb.setiobudi@gmail.com)