The bank’s biannual South Asia Economic Focus report suggested growth is expected to pick up to 6.9% this year and 7.1% next year.
It also said the region could extend its economic lead over East Asia and the Pacific.
However, South Asia’s reliance on India’s performance and lack of consistent growth in other countries could potentially undermine this strong outlook. Exports are weak, progress on fiscal consolidation is slow and deficits remain high.
Employment rates are also down, especially in India, Bhutan and Sri Lanka, and rates are also falling faster than in other parts of Asia, according to the 15 April report.
Martin Rama, World Bank South Asia Region chief economist, said: “More than 1.8 million young people will reach working age every month in South Asia through 2025 and the good news is that economic growth is creating jobs in the region.
“But providing opportunities to these young entrants while attracting more women into the labour market, will require generating even more jobs for every point of economic growth.”
Around 11.7 million jobs need to be created each year to arrest the fall in employment rates.
However, the bank said many more and better jobs were needed if South Asia wanted to match the employment levels seen in other regions.
“Policies and actions are needed to make growth more labour-intensive, and especially to create the kinds of jobs that can encourage greater labour force participation by women,” said report author Robert Beyer.