ISA Region Report
Central and South Asia
March 2015 Edition
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Table of Contents
Current Events:
Economic Outlook:
• Recent Political Events
• Recent Economic Events
• Other Recent Events
• Economic Overview
• GDP Growth Forecasts
• Keys to Regional Economic Growth
• Inflation Forecasts
• Regional Exchange Rate Forecasts
• Labor Force Overview
• Foreign Investment Outlook
• Key Regional Economic Issues
• Regional Economic Risk Outlook
Political Outlook:
• Regional Political Overview
• Recent Elections or Government Changes
• Upcoming Elections
• Key Regional Disputes or Conflicts
• Potential Conflicts
• Regional Military Outlook
• Key Regional Political Issues
• Regional Political Risk Outlook
Demographic & Environmental Outlook:
• Population Overview
• Population Characteristics
• Development of Leading Urban Centers
• Key Demographic Issues
• Key Environmental Issues
• Regional Demographic and Environmental Risk
Outlook
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Current Events and Recent Changes Overview
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Central and South Asia: Recent Political Events and Changes
Key Political Events and Changes:
• United States President Barack Obama visited India after
he was invited by Prime Minister Narendra Modi to attend
India’s Republic Day commemorations. During President
Obama’s visit, a deal was reached that will allow US firms to
sell civilian nuclear technology to India. This was the latest
sign of the strengthening economic and political ties between
the world’s two largest democracies.
• Indian Prime Minister Narendra Modi announced that he
would visit China in May 2015.
• At least 60 people were killed when a suicide bomber
struck a Shiite mosque in southern Pakistan. The Jundullah
militant group claimed responsibility for the attack.
• In Afghanistan, most of President Ashraf’s Ghani’s cabinet
members had yet to be approved by the parliament, leading
to political gridlock as caretaker officials ran most of the
country’s government ministries.
• It was reported that Uzbekistan’s President Islam Karimov
lost consciousness after collapsing at an event.
• In Sri Lanka’s early presidential election, former Health
Minister Maithripala Sirisena defeated President Mahinda
Rajapaksa by a margin of 51.3% to 47.6%, thanks in large
part to the support of the country’s Tamil and Muslim
minorities. Furthermore, much of the political opposition
gave its backing to Mr. Sirisena.
• In the days after the Sri Lankan presidential election, it
was rumored that President Rajapaksa had attempted to
convince the country’s armed forces and police to allow
him to remain in office, but this was rejected, forcing the
president to accept his defeat.
• Political clashes continued in Bangladesh, resulting in
dozens of deaths. Over 7,000 members of the political
opposition were arrested in the wake of this unrest.
• Nepal’s Prime Minister Sushil Koirala promised that a new
constitution for Nepal would be drafted in the coming
months, despite recent delays. However, delays in drafting
a new constitution led to violent protests across Nepal, as
well as a brawl in the country’s parliament. Earlier, the
opposition Maoists and their allies staged a general strike
to protest against their exclusion from the process of
drafting a new constitution.
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Central and South Asia: Recent Economic Events and Changes
Key Economic Events and Changes:
• Oil prices rebounded slightly, rising to $52 a barrel (West
Texas Intermediate Crude) after falling by 60% over the
previous six months.
• Iran’s economy expanded by 3.7% year-on-year in the
third quarter of 2014, its second consecutive quarter of
respectable growth.
• Economic growth in Bangladesh was estimated to have
increased slightly to 6.1% in 2014. Meanwhile, Bangladesh’s
economy began to be negatively impacted by the political
unrest that worsened in recent months. Moreover, potential
foreign investment in Bangladesh could be curtailed by this
political unrest.
• Kazakhstan’s GDP growth rate rose to 4.3% on a yearon-year basis in the fourth quarter of 2014.
• Power shortages remained a major problem across many
areas of Pakistan, reducing the country’s level of economic
growth. A recent attack by militants on the country’s power
grid left 80% of Pakistan without electricity for a number of
days.
• Economic growth in Afghanistan continued to be held
back by the political instability that continues to plague
many areas of the country. Some Afghan government
officials warned that Afghanistan’s economy could shrink in
2015.
• Uzbekistan’s GDP growth rate was reported by the
government to have been 8.1% in 2014.
• Nepal economy was estimated to have expanded by 5.5%
in 2014.
• Production at Kazakshtan’s giant Kashagan oil field was
unlikely to be restarted before the end of 2016 due to major
problems with many of the pipelines leading away from the
field.
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Central and South Asia: Other Recent Events and Changes
Other Key Events and Changes:
• The United Nations Office on Drugs and Crime (UNODC)
reported that opium production in Afghanistan likely rose to
another record high in 2014.
• A new survey showed that the population of tigers living in
the wild in India had risen by 30% over the past three years.
• An outbreak of swine flu killed at least 75 people in India.
• 57 people were killed when a bus crashed into an oil tanker
near Karachi.
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Regional Political Outlook
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Sri Lanka: Most Recent Elections
Presidential Elections – January 2015
Summary of the Last Elections:
Results:
In late 2014, President Mahinda Rajapaksa announced
that the next presidential election in Sri Lanka would
take place in January 2015, two years ahead of schedule.
• President Rajapaksa was confident that he retained a good
deal of support among voters as peace had taken hold in Sri
Lanka and as the country’s economy grew at a healthy pace
in the months before the election.
• However, he faced a surprise challenger when his former
Health Minister Maithripala Sirisena left the government and
announced that he was running for president.
• Shortly thereafter, the challenger received the backing of
nearly all of the main political opposition parties in Sri Lanka.
With the backing of the political opposition, Mr. Sirisena
won January 2015’s presidential election, defeating
President Rajapaksa by a margin of 51.3% to 47.6%.
• Many voters in Sri Lanka were turned off by the president’s
patronage of family members and close political allies.
• Without the backing of the armed forces for what was
alleged to be an attempt to remain in power, President
Rajapaksa was forced to admit defeat.
Source: National
election authority
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India: Most Recent Elections
Parliamentary Elections (April-May 2014)
Summary of the Last Elections:
While the Hindu nationalist BJP party had been favored
to win India’s five-week national elections that were the
largest elections in world history, the fact that it won by
such a wide margin surprised most observers.
• The scale of the BJP’s victory was so great that the BJP
party became the first political party in 30 years to win a
majority of seats in the Indian parliament on its own.
• As a result, the BJP and its polarizing leader Narendra
Modi will have a firm grip on power in the world’s secondmost-populous country.
Results:
Source: National
election authority
The Congress Party suffered an unprecedented defeat in
2014’s parliamentary elections.
• These national elections in India highlighted the
dissatisfaction with the previous Congress-led government of
Prime Minister Manmohan Singh.
• This dissatisfaction allowed the BJP to win 282 of the 543
seats in the parliament, while its allies in the National
Democratic Alliance won 54 seats.
• In contrast, the governing Congress party, led by the
untested Rahul Gandhi, suffered a crushing defeat as its
number of seats in the parliament fell from 206 to just 44.
• As a result, the BJP’s grip on power will be unchallenged
for the time being, giving it the power to take India in the
direction that it chooses.
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Bangladesh: Most Recent Elections
Parliamentary Elections – January 2014
Summary of the Last Elections:
Results:
2014’s national elections turned into a farce as the
opposition Bangladesh Nationalist Party (BJD)
boycotted the election.
• Moreover, the country’s leading Islamist political party,
Jamaat-e-Islami, was barred from taking part in the elections
amid a crackdown on the party’s leadership.
• During the election campaign, the BJD staged a series of
general strikes, while supporters of Jamaat-e-Islami carried
out protests across the country that turned violent.
As a result of the fact that most of the country’s leading
political parties did not take part in the elections, the
governing Awami League was able to sweep to a
comprehensive victory.
• The Awami League won 231 of the 300 seats in the
parliament.
• The Jatiya Party was the only other party to win a
significant number of seats in the parliament.
• More than half of the 300 seats in the parliament were
contested by just one candidate, usually from the Awami
League.
Source: National
election authority
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Nepal: Most Recent Elections
Constitutional Assembly Elections – November 2013
Summary of the Last Elections:
Results:
After months of turmoil, Nepal’s latest Constitutional
Assembly elections took place in November 2013.
• The country’s leading political parties had struggled to reach
an agreement on the terms for these elections and this led to
a lengthy delay,
• Moreover, there was widespread unrest in the months
leading up to these elections.
In 2013’s elections, the centrist Nepali Congress party
won the largest share of the vote and won 196 seats in
the Constitutional Assembly
• The Communist Party (Unified Marxist-Leninist) finished
second, winning 175 seats.
• Meanwhile, the Maoists slumped to a third place finish,
winning just 80 seats on the Constituent Assembly.
• A large number of smaller parties also managed to win
seats in this body in these elections.
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Key Regional Disputes in Central and South Asia
India and Pakistan
•Key Issues – The status of Kashmir is the main flashpoint between India and Pakistan and has been the
scene of much fighting. Other disputes include religious relations in India and the accusations that elements
of the Pakistani government have supported terrorist organizations inside India.
•Outlook – While some progress may be made in the near-term, there is little likelihood of a permanent
breakthrough on the issue of Kashmir, as hard-liners in both countries oppose any sort of compromise.
Afghanistan
•Key Issues – The government of President Karzai has yet to gain control over the many areas of
Afghanistan that remain under warlord control. Moreover, the Taliban has been recruiting new
members in southern areas of Afghanistan and is stepping up its attacks on government forces.
•Outlook – Afghanistan will remain chaotic, but the US and other countries will be forced to increase
their military and economic support to the embattled Karzai government.
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Key Regional Disputes in Central and South Asia
Unrest in the Caucasus
•Key Issues – Armenia and Azerbaijan continue to dispute the territories of Nagorno-Karabakh and
Naxcivan. Georgia faces the potential for further domestic political unrest, as well as separatist
movements in Abkhazia and South Ossetia.
•Outlook – The internal political unrest in each of these three countries will dominate the headlines over
the next year or two. However, it is external disputes that continue to hold the greatest risk for stability.
Instability in Ex-Soviet Central Asia
•Key Issues – Islamic fundamentalism is gaining ground in many areas in the region, particularly in the
heavily populated Fergana Valley.
•Outlook – Countries such as Tajikistan and Uzbekistan face the prospects of significant internal
unrest. Kazakhstan, despite its ethnic makeup, will see increasing stability due in large part to that
country’s rapid economic expansion. Turkmenistan will remain a Stalinist dictatorship under President
Niyazov.
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The Potential Conflict Between India and Pakistan
Main Disputes:
• Both countries claim the predominantly Muslim region of
Kashmir, with the disputed territory divided between the two
countries (and China).
– The dispute stems from Pakistan’s split from India
following the withdrawal of the British in the 1940s.
• Extremists in both countries have intensified the rivalry
between the two countries.
– India has a very large Islamic minority and worries
about its allegiance to India.
Best- and Worse-Case Scenarios:
• Best Case Scenario
– An agreement is reached on the future of Kashmir
(highly unlikely) and the main source of tension
between the two countries is eliminated.
• Worst-Case Scenario
– An all-out war between the two rivals that includes the
use of nuclear weapons, killing tens of millions of
people.
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The Prospect of a Civil War in Afghanistan
Main Disputes:
• Ethnic relations in Afghanistan remain highly strained.
– The presence of US and other foreign military forces
has forced the various ethnic groups to improve their
relations.
• Taliban forces are still active in areas of southern and eastern
Afghanistan.
– Together with Al-Qaeda remnants, they continue to try
and destabilize the country.
• Warlords remain influential in many areas of the country.
– Their cooperation with Kabul has been sporadic.
Best- and Worse-Case Scenarios:
• Best Case Scenario
– Foreign forces remain in the country for a long period
and Kabul is able to consolidate its control over the
country. Ethnic relations gradually improve and the
remnants of the Taliban and Al-Qaeda are eliminated.
• Worst-Case Scenario
– Foreign forces reduce their presence in Afghanistan,
lessening the ability of Kabul to gain control of the
regions. Warlords and minorities ignore the rule of
Kabul and begin fighting with themselves.
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Potential Flashpoint: Armenia and Azerbaijan
Flashpoint Summary
A major source of continuing
conflict between Armenia and
Azerbaijan is the status of
Nagorno-Karabakh, an
autonomous oblast in Azerbaijan,
the inhabitants of which are
primarily Armenian and Christian.
Since the tenuous 1994 ceasefire
following the Nagorno-Karabakh
War, Armenian military forces
have been in control of NagornoKarabakh, a situation which has
threatened to re-escalate into war.
Main Actors
Armenia
• Armenia believes it is vital that
Nagorno-Karabakh becomes part
of Armenia to ensure stability and
safety for the ethnic Armenian
inhabitants of that region.
Azerbaijan
• Azerbaijan insists that it will not
allow Armenian control of
Nagorno-Karabakh to continue
indefinitely.
In recent years, Azerbaijan has
used its oil and gas wealth to
finance a major expansion of the
country’s military power.
Nagorno-Karabakh Republic
• The Nagorno-Karabakh Republic
has been pushing for
independence from both Armenia
and Azerbaijan.
Potential Outcomes
Russia
• Russia, while siding with
Armenia in this dispute, has been
the leading mediator.
Global Implications
Maps
Russian Influence
• With the renewed effort by
Russia to strengthen its influence
in the former Soviet republics, the
conflict between Armenia and
Azerbaijan could be a pretext for
Russia to once again exercise
influence in the region
Azerbaijan’s Oil Exports
• Azerbaijan’s oil exports have
strengthened its ties with the
United States and Europe.
Turkey
• Turkey’s historical animosity with
Armenia has led to it playing a
vital supporting role for Azerbaijan
in this dispute.
• Azerbaijan invades Nagorno-Karabakh after years of building up its military capabilities, a move that leads to Russian forces being sent to support
Armenia.
• The status quo continues for quite some time, with Azerbaijan’s growing power forcing Armenia to develop ever-closer ties with Russia.
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Regional Military Outlook
Balance of Power in the Region
India easily has the strongest military in South Asia, but
its power projection capabilities remain limited.
• Pakistan has countered this inferiority vis-à-vis India by
developing nuclear weapons.
Iran’s growing power is being felt in both Central Asia and
the Persian Gulf.
• However, the US build-up of forces in the region is containing
Iranian ambitions.
Source: SIPRI
Outlook
India’s military advantage over Pakistan will continue to
grow as its spending accelerates.
• This gap will alarm Pakistan and raise instability levels in the
region.
The growing US military presence in Central Asia and the
Middle East will bring it into conflict with Iran.
• Iran will find itself surrounded by the US military and its large
presence in Iraq, Afghanistan and Central Asia.
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Central and South Asia: Political Risk Outlook
Current Political Risk Ratings:
Political Risk Outlook:
• Central and South Asia have some of the world’s highest
levels of political risk.
• Nearly every country in the region has a significant
dispute with at least one of its neighbors.
• Moreover, a majority of the countries in the region are
dealing with internal unrest as well, with the potential for a
number of full-blown civil wars in Central and South Asia.
Low Risk………………High Risk
• Dictatorships are still prevalent in a number of countries in
the region, making it one of the least democratic regions on
earth.
• ISA Risk Ratings
–
–
–
–
–
0.0 to 1.9 = Low Risk
2.0 to 3.9 = Low to Moderate Risk
4.0 to 5.9 = Moderate Risk
6.0 to 7.9 = Moderate to High Risk
8.0 to 10 = High Risk
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Regional Economic Outlook
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Central and South Asia Economic Overview
Central and South Asia is one of the world’s
poorest regions, with uneven levels of development
across the region.
• Only countries with large oil and gas reserves such as
Kazakhstan have reached higher levels of development.
South Asia is home to more than 1.6 billion people,
so its long-term economic potential remains high.
• India is the region’s dominant economy, but it has
struggled to maintain the high level of economic growth
in recent years.
• Likewise, large emerging markets such as Pakistan
and Bangladesh have also struggled to diversify their
economies and achieve higher levels of economic
development.
Source: ISA
Economic Forecasts,
Size of the circle
indicates the size
of the economy
Per Capita GDP at PPP
Given the large-scale population growth across most of the region, fighting poverty will
remain the chief economic concern for most countries in the region. Meanwhile, some
areas of India will realize growth in export-oriented industries, but nowhere near the
scale of China. Iran and Kazakhstan also have economic expansion potential.
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Caucasus Economic Growth Outlook
Source: ISA
Economic Forecasts,
national statistics
Economic growth rates have been relatively low across this sub-region in recent years.
The region’s largest economy, Azerbaijan, has failed to restore the soaring rates of
economic growth that occurred when the country’s oil and gas industry expanded
rapidly between 1997 and 2009.
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Former Soviet Central Asian Economic Growth Outlook
Source: ISA
Economic Forecasts,
national statistics
Kazakhstan and Turkmenistan have had some of the world’s highest GDP growth rates
over the past 15 years thanks to increases in oil and gas output, but growth in the
former has slowed sharply. Other countries in the region have also performed well
economically as foreign investment in the region increases.
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West-Central Asian Economic Growth Outlook
Source: ISA
Economic Forecasts,
national statistics
Iranian GDP growth has been pushed downwards by the impact of economic sanctions
on the country’s oil and gas industry. Meanwhile, Pakistani economic growth had been
driven by increases in exports, but this came to an end in recent years as the country
suffered from a fall in exports as well as the impact of the unrest of recent years.
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South Asian Economic Growth Outlook
Source: ISA
Economic Forecasts,
national statistics
India’s economy has slumped in recent years, raising questions about that country’s
ability to close the growth gap with China. Sri Lanka recorded much stronger growth in
recent years thanks to an increase in political stability. Elsewhere in South Asia,
growth remained below potential levels in both Bangladesh and Nepal.
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Central and South Asian Economic Growth Summary
Key Factors
Rapid population growth is fuelling much
of the economic expansion as agriculture
and services grow.
Foreign investment has targeted a few
specialized sectors, but exports remain
limited.
Central Asia’s economy is being
transformed by the oil and gas industry,
but not to the benefit of all.
Political uncertainty will
keep needed foreign
investment away from the
region and will maintain
the dominance of
agricultural and oil.
The manufacturing sector remains small
and in desperate need of foreign
investment.
Despite the tremendous market potential of this region, foreign investors are leery of
the significant political risk that continues to plague all of the countries in the region.
As a result, economic diversification will lag behind that of other emerging regions and
long-term economic growth will suffer.
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Caucasus Inflation Outlook
Source: ISA
Economic Forecasts,
national statistics
Inflation rates in the Caucasus region fell sharply in recent years, after peaks in 2008
and 2011. Looking ahead, inflation rates will rise over the near-term, but not to
previous levels.
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Former Soviet Central Asian Inflation Outlook
Source: ISA
Economic Forecasts,
national statistics
Uzbekistan continues to suffer from high inflation rates as a result of high economic
growth in Turkmenistan and continuing shortages in Uzbekistan. Elsewhere is the
region, inflation will remain relatively stable over the near-term.
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West-Central Asian Inflation Outlook
Source: ISA
Economic Forecasts,
national statistics
International sanctions resulted in the collapse of Iran’s currency and this has led to
soaring inflation rates in that country in recent years that only began to ease in 2014.
Inflation rates eased over the past year in Pakistan, but could rise again in the coming
years.
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South Asian Inflation Outlook
Source: ISA
Economic Forecasts,
national statistics
Inflationary pressures have persisted in recent years due to higher food and energy
prices as well weaker currencies. Looking ahead, food prices will remain high over the
near-term and could prove to be a constant threat to the region over the longer-term.
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Central and South Asian Key Exchange Rates Against the US Dollar
(1 US$ = Local Currency)
Source: ISA
Economic Forecasts,
OANDA
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Central and South Asian Unemployment Rates
Source: ISA
Economic Forecasts,
national statistics
Unemployment in South and Central Asia will remain relatively stable, with job creation
and the increase in the working-age population matching one another. Greater
problems include underemployment and low wages that maintain the region’s low
levels of purchasing power.
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Foreign Investment in the Caucasus
Source: UNCTAD
Foreign investment in the Caucasus had been driven by the oil and gas industry in
Azerbaijan. Given the recent political instability in the region, it will be very difficult for
these three countries to attract large amounts of foreign investment in other economic
sectors over the forecast period.
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Foreign Investment in the Former Soviet Central Asia
Source: UNCTAD
FDI inflows into Kazakhstan have remained high in recent years as new oil reserves
have been found in that country. Elsewhere, foreign investment remains relatively
small, due in large part to continuing government intervention in the economies of the
region, as well as the rampant corruption that plagues the economies of this region.
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Foreign Investment in West-Central Asia
Source: UNCTAD
Iran has the potential to attract significant foreign investment both in its huge oil and
gas industries and its fledgling manufacturing sector. Foreign investment in Pakistan
has fallen sharply due to the political unrest in that country.
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Foreign Investment in South Asia
Source: UNCTAD
The inconsistent pace of economic reform in India has prevented foreign investment
levels in that country from soaring. Elsewhere in the region, Sri Lankan peace would
lead to a significant increase in foreign investment in that country.
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Regional Foreign Investment
Source: UNCTAD
India is the largest recipient of foreign investment in Central and South Asia by a wide
margin, but its FDI inflows are very small in relation to its giant population. Elsewhere
in the region, most foreign investment is going into the oil and gas industries in
Kazakhstan and other oil producers, helping to reduce poverty in these countries.
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South and Central Asia: Key Economic Issue
Outsourcing
Summary:
India is a leading recipient of outsourcing jobs,
particularly from the US, UK and Canada.
• English language skills, combined with a cheap
and technologically-friendly labor market, have led to
this surge in outsourcing investment in India.
– US and UK firms estimate that they save
nearly 30% on costs when they outsource
call-centers and other such segments to India.
• Most outsourcing in India consists of call centers,
technical support and back-office activities.
Outlook:
The growth of protectionist sentiment in the US
and Europe is threatening the growth in this
sector in India.
• The US accounts for two-thirds of outsourcing
investment in India, but this could be jeopardized by
opposition to outsourcing in the US.
Outsourcing remains a major source of economic
expansion in India and is allowing the country to
develop other export industries through a
transferral of business practices, technology and
expertise.
• Moreover, no other sector has done more to pry open
the Indian economy to global influences.
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Central and South Asia: Economic Risk Outlook
Current Economic Risk Ratings:
Economic Risk Outlook:
• Government spending and the lack of foreign investment
vis-à-vis other emerging markets are the greatest economic
risks facing Central and South Asia.
• Unemployment and the lack of skilled workers is a major
risk for future economic growth in much of the region.
• India’s underperforming economy has also raised
economic risk levels across much of the region in recent
years.
Low Risk………………High Risk
• ISA Risk Ratings
–
–
–
–
–
0.0 to 1.9 = Low Risk
2.0 to 3.9 = Low to Moderate Risk
4.0 to 5.9 = Moderate Risk
6.0 to 7.9 = Moderate to High Risk
8.0 to 10 = High Risk
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Demographic and Environmental Outlook
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Central and South Asia Population Trends
Working-Age Population
Total Population
2,500,000,000
1,600,000,000
Source: US Census
Bureau
1,400,000,000
2,000,000,000
Source: US Census
Bureau
1,200,000,000
1,000,000,000
1,500,000,000
800,000,000
600,000,000
1,000,000,000
400,000,000
500,000,000
200,000,000
0
2000
0
1950
1970
1990
2010
2030
2010
2020
2030
2040
2050
2050
Working-Age
Non-Working-Age
Central and South Asia’s population growth is slowing, but remains well above the
world average. As a result, the region will add nearly one billion people by the year
2050. Nearly 75% of this population growth will be among working-age people, a major
difference from other regions around the world.
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Central and South Asia Population Trends by Country
Total Population
2,500,000,000
Contribution to Regional Population
Growth (2000-2050)
Source: US Census
Bureau
India
2,000,000,000
Pakistan
Bangladesh
1,500,000,000
Afghanistan
1,000,000,000
Nepal
500,000,000
Iran
0
Uzbekistan
1950
1970
1990
2010
2030
2050
Source: US Census
Bureau
Others
India
Afghanistan
Pakistan
Uzbekistan
Bangladesh
Nepal
Iran
Others
0%
10%
20%
30%
40%
50%
60%
70%
India dominates the region, accounting for nearly two-thirds of its population. All of the
largest countries in the region will see population growth first half of this century.
Pakistan will pass the 200 million mark shortly, while Bangladesh will follow suit
around the year 2030.
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Central and South Asia Religious Composition
Most of the world’s Hindu
population is found in India.
Muslims account for a majority of
people in Central Asia and
Bangladesh.
Hindu-Muslim relations have been
uneasy for hundreds of years and
many tensions continue today.
Iran is the world’s largest Shi’a
Muslim country, whereas most other
Muslims in the region are Sunnis.
India is the birthplace of Buddhism,
but it survives in South Asia mainly
in Sri Lanka.
Largest Religious Groups
Hindu
Muslim
Christian
Buddhist
Others
Source: CIA
0
250,000,000
500,000,000
750,000,000 1,000,000,000
Hindu and Muslim tensions will continue to dominate political and social affairs across
South Asia, highlighted by the disputes between India and Pakistan. Elsewhere,
Islamic fundamentalism will remain a major threat to stability not only in Afghanistan,
Pakistan and Iran, but also in the former Soviet Central Asia and in Bangladesh.
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Central and South Asia Language Composition
English is the main language of
inter-ethnic communication across
all of South Asia.
Hindi is the largest first language
spoken in India and is also widely
spoken as a second language.
Largest First Languages
Source: CIA
Hindi
Bengali
Punjabi
Bengali is the main language of
south-eastern India and
Bangladesh.
Tamil
Urdu
Persian is the main language of Iran
and many related languages are
spoken in Central Asia.
Persian
Others
Russian remains the language of
inter-ethnic communication in most
of ex-Soviet Central Asia.
0
200,000,000
400,000,000
600,000,000 800,000,000
South and Central Asia are home to hundreds of diverse languages, many of which are
found in India. This has allowed English to gain a key role as a language of commerce,
education and diplomacy across the region.
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Largest Cities in Central and South Asia
Source: World
Gazetteer
India’s population is easily the largest in the region and this is reflected in the size of its
cities. Mumbai, Delhi and Kolkata all rank among the 14 largest cities in the world and
India accounts for 11 of the regions 25 largest cities. In Central Asia, the main cities are
Tehran and Tashkent.
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Key Demographic Issue in Central and South Asia
India and China
India and China account for more than 2.5 billion
people.
• The major river valleys of the two regions have
historically been the most populated areas on the planet.
Source: US Census
Bureau
China’s aggressive population control policies have
brought that country’s population growth to
manageable levels.
• On the other hand, India continues to realize largescale population growth as the birth rate remains high.
• India will add 140 million people to its total population in
this decade alone.
• India will overtake China as the world’s most populous
country within 25 years.
India’s continuing population growth is one of the greatest threats to the region’s
fragile economy and dwindling resources. The government will increase its efforts to
promote population control, but the effects of this will not be felt for many decades,
when the population of India has already surpassed 1.6 billion people.
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Top Environmental Issues in Central and South Asia
The Need for
Agricultural Land
Scarce water supplies and the lack of available land are major threats to the
region’s food supplies.
• With the region’s population set to grow by another one billion people in the next
fifty years, this need for an agricultural revolution is acute.
• Pakistan faces a particularly severe problem given its lack of arable land.
The Shrinking Aral
Sea
The shrinking of the Aral Sea is one of the worst man-made environmental
disasters in history.
• The Aral Sea was once the world’s fourth-largest landlocked body of water, but
today it is only 30% of its size in 1960.
• Most over the water flowing into the sea has been diverted for cotton.
Air Pollution
Urbanization and the spread of industrial activities has led to huge air
pollution problems across large areas of the region.
• This problem is going to become worse as traffic levels rise and cities continue to
expand.
• The “Brown Cloud” that effects much of the region is only a foretaste.
Many areas of this region face some of the world’s most severe environmental
problems. Unfortunately, the governments of the region are unable to make major
progress on fighting pollution as economic growth and the alleviation of poverty
remain the main objectives of most countries in the region.
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Key Geographic Issue in Central and South Asia
Dwindling Water Resources
Much of Central and South Asia has inadequate water
supplies for the region’s growing population.
• Central Asia’s plight is highlighted by the dramatic
shrinkage of the Aral Sea.
India has a number of schemes to divert rivers and
store rainwater from the monsoon season.
•Other areas of the region, with far less water resources,
face an uncertain future.
• Pakistan has few water resources and a rapidly growing
population.
The scale of Central and South Asia’s water shortage problem is unmatched anywhere
in the world, given the massive population of the region. Unfortunately, the Aral Sea
disaster is likely to only be the first in a series of water-related disasters to strike this
region.
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Central and South Asia: Demographic and Environmental Risk Outlook
Current Risk Ratings:
Demographic Risk Outlook:
• The region’s rapidly growing population is a major risk to
the stability and prosperity of most countries there.
Environmental Risk Outlook:
Low Risk………………High Risk
• ISA Risk Ratings
–
–
–
–
–
• Environmental risk levels will continue to rise in Central
and South Asia as pollution and man-made environmental
problems worsen as the population and economy expand.
0.0 to 1.9 = Low Risk
2.0 to 3.9 = Low to Moderate Risk
4.0 to 5.9 = Moderate Risk
6.0 to 7.9 = Moderate to High Risk
8.0 to 10 = High Risk
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Summary
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Future Outlook Summary
Political Outlook
• Tensions between India and Pakistan will remain the single greatest threat to the region, given the massive
destructive potential of a war between these two nuclear powers.
• Islamic fundamentalism will remain a strong force across Central Asia, forcing the international community to
remain committed to Afghanistan and other areas of Central Asia.
• Unrest in the Caucasus is increasingly likely as wide sections of the population demand political reform.
Economic Outlook
• The region’s economic performance will be mixed in the coming years, with the threat of another global
downturn raising the potential for a slowdown across Central and South Asia.
• However, most regions will record solid economic growth, but not enough to lift the poorer segments of
society out of poverty.
• Foreign investment will remain small due to the ongoing political unrest in the region as well as the lack of
export-oriented industries in countries such as India and Pakistan.
Demographic and Environmental Outlook
• Population growth will continue across the region, with India overtaking China as the world’s most populous
country before the middle of this century.
• This population growth will threaten the region’s already-damaged environment, leading to massive
environmental degradation in all areas of Central and South Asia.
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ISA Region Report
Central and South Asia
March 2015 Edition
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