"A stronger growth in imports than in exports and moderated workers' remittances will lead to a current account deficit of 1.2 percent of the GDP in 2004 from the surplus of 0.6 percent in present fiscal," the Asian development Outlook 2003 Update (ADO Update) released yesterday observed.

Reviewing the regional economy, the report said a more stable political environment and improved global economic condition should enable South Asia to maintain its economic development in 2003 and 2004.

The ADO is the ADB's annual flagship on economic publication, analysing and forecasting economic trends in the Asia-Pacific region.

The ADO Update revised its GDP growth forecast slightly upward for South Asia to 5.8 percent from 5.7 percent projected in April. However, its forecast of 6.1 percent growth in 2004 remained unchanged.

The prospect of a strong global economy is predicted to achieve a somewhat accelerated growth in 2004, though the progress in fiscal consolidation and structural reforms will be necessary to sustain rapid and broad-based growth, said the ADO Update.

The balance of payment outcomes is observed to be healthier than in the earlier forecast.

It said India leads the sub-regional development with its GDP growth outlook for 2003 and 2004 remaining at 6 percent and 6.3 percent respectively, unchanged since the earlier projection.

India's higher GDP growth in 2004 reflects the expected upswing in the business sector of the country, which is strengthening in the world economy.

Pakistan should preserve its GDP growth of at least 5 percent in 2004, with a pickup in investment. The launch of sound macroeconomic policies and favourable supply-side economics indicate that the 4 percent inflation target is attainable.

Sri Lanka will likely to remain strong with the GDP growth forecasts at 5 percent in 2003 and 5.5 percent in 2004. This is supposed to be the result of ongoing peace negotiations with the Liberation Tigers of Tamil Eelam (LTTE) and adherence to macroeconomic and structural policies finalised in early 2003, which has been supported by foreign financial aid.