South AsiaEconomicUpdateWorking with Industrial Policy The Office of theChief Economistof the South AsiaRegion South AsiaEconomicUpdate APRIL 2026 South AsiaEconomicUpdate © 2026 International Bank for Reconstruction and Development / The World Bank1818 H Street NW, Washington, DC 20433Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved1 2 3 4 29 28 27 26 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusionsexpressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governmentsthey represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work anddoes not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use ofor failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, links/footnotes, and other information shown in this work do not imply any judgment on the part of The World Bank concerning thelegal status of any territory or the endorsement or acceptance of such boundaries. The citation of works authored by others doesnot mean the World Bank endorses the views expressed by those authors or the content of their works. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities ofThe World Bank, all of which are specifically reserved. Certain artificial intelligence (“AI”) tools may have been used in creating this work, as indicated in the work, but all transformativeand creative effort expressed in the work was performed by the World Bank staff or external contributors. The World Bank is notresponsible for any claims, including for errors or inaccurate information, generated by AI programs not controlled or owned bythe World Bank. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt thiswork, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: World Bank. 2026.South Asia Economic Update: Working with Industrial Policy.April. Washington, DC: World Bank. DOI: 10.1596/978-1-4648-2326-8. License: Creative Commons Attribution CC BY 3.0IGO. Translations—If you create a translation of this work, please add the following disclaimer along with the attribution:Thistranslation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shallnot be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution:This is anadaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of theauthor or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content contained within the work. TheWorld Bank therefore, does not warrant that the use of any third-party-owned individual component or part contained in thework will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you.If you wish to reuse a component of the work, it is your responsibility to determine whether permission is needed for that reuseand to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, orimages. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank, 1818 H Street NW,Washington, DC 20433, USA; email: pubrights@worldbank.org. ISBN (electronic): 978-1-4648-2326-8DOI: 10.1596/978-1-4648-2326-8 Cover design: David Spours (Cucumber Design); Design and Creative Services, Global Corporate Solutions, World Bank Group. The cutoff date for the data used in the report was March 25, 2026. AI Disclosure Statement:Gemini 2.5 Flash-Lite, Google DeepMind, was used from November 2025 through January 2026 toclassify whether firms hiring in South Asia were multinational firms. Prompts queried the model with firm names and requested astructured response indicating whether a firm operates in multiple countries. The resulting classification was used to construct afirm-level indicator of international exposure. A random sampling of the AI-generated classifications was reviewed and verified. Summary of Contents Acknowledgments.......................................................................................................................................xiForeword.....................