Welcome to International Coverage’s South Asia Temporary.
After a tumultuous yr, South Asia might be seeking to bounce again with a smoother 2026. Sadly, the area enters the brand new yr dealing with severe dangers of political and financial instability in addition to regional battle because it grapples with the unsettling impacts of a unstable world order.
Welcome to International Coverage’s South Asia Temporary.
After a tumultuous yr, South Asia might be seeking to bounce again with a smoother 2026. Sadly, the area enters the brand new yr dealing with severe dangers of political and financial instability in addition to regional battle because it grapples with the unsettling impacts of a unstable world order.
Beneath are 5 storylines to observe that can form South Asia’s trajectory for the approaching yr—and maybe past.
Essential Elections in Bangladesh and Nepal
Bangladesh and Nepal will maintain high-stakes nationwide elections early in 2026. Each are the primary polls since mass uprisings ousted unpopular leaders—former Bangladeshi Prime Minister Sheikh Hasina and former Nepali Prime Minister Okay.P. Sharma Oli—however every nation has taken a distinct path to get there.
Bangladesh’s interim authorities, which took workplace in August 2024, initially centered on pursuing formidable reforms and waited a yr to announce an election date, now set for Feb. 12. Nepal’s provisional administration assumed energy in September and instantly introduced a timeline for polls—scheduled for March 5. It has zeroed in on election preparations.
If a essential mass of voters in every nation conclude that their election isn’t credible, or in the event that they don’t like the federal government that it brings to energy, there’s actual danger of contemporary unrest. Bangladesh and Nepal each have extremely charged political environments. Mobilized younger individuals introduced down the earlier leaders and see elections as a vital subsequent step to revive good governance and democracy.
If these younger leaders conclude that their expectations haven’t been met, then they’ll probably return to the streets. India and China, which have necessary relations with each nations, will watch the elections carefully.
Pakistan and Its Neighbors
This yr, Pakistan had a quick army battle with India and got here shut to at least one with Afghanistan. Islamabad faces a danger of hostilities with each neighbors in 2026. India-Pakistan relations are tenser than they’ve been in many years, and a single set off—a terrorist assault, a cross-border incursion, an Indian dam-building undertaking—might provoke one other battle.
In the meantime, Pakistan has been unable to persuade or compel the Taliban regime in Afghanistan to curb terrorist teams which have staged rising cross-border assaults. This has raised the specter of sustained Pakistani army operations in Afghanistan to root out militants—and the Taliban retaliating by mobilizing militants to hold out strikes in opposition to Pakistan.
Mediation efforts by Qatar, Saudi Arabia, and Turkey did not quell Afghanistan-Pakistan tensions, although these nations will probably preserve making an attempt subsequent yr. U.S. President Donald Trump has stated he needs to mediate between India and Pakistan, however New Delhi’s rejection of third-party involvement will preempt that risk.
In the end, in every case, the tough process of holding tensions at a manageable stage will fall to Pakistan and its neighbors, to not exterior actors.
The Maldives’ Financial system
Two of the world’s most severe financial crises lately originated in South Asia. In 2022, Sri Lanka defaulted on its debt, and Pakistan narrowly prevented the identical destiny in 2023. Now, the Maldives faces main macroeconomic stress—and if it doesn’t mitigate this stress, it might spark issues about turning into the subsequent Sri Lanka.
In October, the World Financial institution warned that the Maldives faces a “excessive danger of debt misery” due to international alternate shortages, inadequate financing choices, and enormous debt service obligations (thanks in nice half to hefty Chinese language loans). Public debt is projected to strategy 135 p.c of the nation’s GDP within the subsequent yr.
In each Sri Lanka and Pakistan, extreme debt and shrinking international alternate reserves have been main triggers for the financial meltdowns.
The excellent news for the Maldives is that it has to this point fended off an even bigger disaster by sturdy tourism income and latest infusions of help from key companions similar to India. However with the nation’s economic system remaining so weak, potential new exterior shocks—from spikes in international commodity prices to sudden interruptions in vacationer income—might spell huge bother.
Modi’s Future
Indian Prime Minister Narendra Modi attends a tribute ceremony at San Martín Sq. in Buenos Aires on July 5.Tomas Cuesta/Getty Photos
Political change has been a constant pattern in South Asia lately—however not in India. Prime Minister Narendra Modi, first elected in 2014, is the longest-serving democratically elected chief within the area. Subsequent yr, there might be rising hypothesis about Modi’s political future—and particularly about whether or not he’ll run for a fourth straight time period in 2029.
Modi stays extremely popular, and his occasion gained a number of key state elections in 2025—sturdy retorts to critics who hope that the worse-than-expected electoral efficiency of the ruling Bharatiya Janata Get together (BJP) in 2024 signaled the start of his demise.
Modi’s supporters will be capable to additional push again in opposition to issues about anti-incumbency sentiment if the BJP triumphs in one other collection of state elections subsequent yr—together with just a few in India’s south, the place the occasion isn’t as sturdy. There is no such thing as a indication to this point that Modi is making ready for retirement, however in 2026, observers will watch carefully for indicators about potential huge modifications.
Trump’s China Coverage
The coverage course the Trump administration takes subsequent yr on China could have important implications for South Asia. Thus far, the White Home hasn’t articulated a coherent technique towards Beijing, as Trump has signaled a need to each compete and cooperate with China.
Trump’s final strategy will have an effect on the floundering U.S.-India relationship, the place a shared need to counter China has lengthy served as strategic glue. If Washington takes a extra average view towards Beijing, and particularly if Trump reaches an understanding with Chinese language President Xi Jinping, then U.S.-India ties might face one other huge problem in 2026.
U.S. policymakers have not too long ago tended to view South Asia by the lens of great-power competitors. Washington’s Indo-Pacific coverage—initiated throughout Trump’s first time period—has centered on producing incentives for South Asian nations to scale back dependence on Beijing, from U.S. infrastructure offers to arms packages. A softer U.S. coverage towards China would imply much less stress on them.
Such a shift would probably be acquired positively in lots of South Asian capitals as leaders search to stability ties with america and China. Nevertheless it might additionally result in a U.S. push to scale back commerce imbalances that don’t favor Washington.
