Macroeconomic Management in the Era of the Information Revolution

This chapter examines the macroeconomic management of the four South Asian economies. South Asian countries experienced high to moderate inflation during the last three decades. In South Asia, historically, at least two exchange rate regimes existed between the nations. While all the nations have been governed by pegged rates in the past, since the mid-1990s, all the nations have gradually embraced a flexible rate regime. All South Asian countries have seen a substantial level of depreciation in currency against the US$, with Pakistan and Sri Lanka seeing the highest level of depreciation, particularly during the post-pandemic time. The trade deficit/surplus of all countries studied has fluctuated wildly over time, and Pakistan has the highest trade deficit in the region. Of all the nations studied, India has the highest level of debt, followed by Pakistan and Sri Lanka. The debt-service ratios have increased out of proportion for Pakistan and Sri Lanka, particularly after the pandemic. Although the region has made substantial progress in various macroeconomic performances during the last several decades, the pandemic and global demand and supply shocks linked to the Russian-Ukrainian war have adversely affected the decades of progress.