The World Bank lowered its economic growth forecast for South Asia for next year, although still expects it to be the fastest-growing emerging market region.

South Asia’s economy will likely expand 5.6% in each of the next two years, down from an estimated 5.8% this year, the Washington-based lender said in a report Tuesday. The region grew at 8.2% in 2022.

The moderation in growth next year is mainly due to the fading of post-pandemic demand, as well as higher interest rates, lower government spending and weak exports, the World Bank said in its South Asia Development Update.

Growth is expected to be “higher than any other developing country region in the world, but slower than its pre-pandemic pace and not fast enough to meet its development goals,” it said.

India, the region’s largest economy, will maintain its economic pace and likely grow 6.4% in the fiscal year ending March 2025, up from 6.3% in 2023-24. Lower-than-projected growth for Bangladesh and Pakistan is dragging down the outlook for the rest of the region, the lender said.

“While South Asia is making steady progress, most countries in the region are not growing fast enough to reach high-income thresholds within a generation,” Martin Raiser, World Bank’s vice president for South Asia, said in a statement. Countries in the region need to “urgently manage fiscal risks” and boost private sector investment, while seizing opportunities created by the global energy transition, he said.