Washington: The World Bank sees the growing rapproachement between India and Pakistan as preparing the ground for better economic performance in South Asia, but believes the security situation in Afghanistan and Nepal as something that may undermine growth and development.

The growing rapprochement between India and Pakistan has renewed hopes in the region and should positively affect economic performance, says the World Bank's latest annual report.

"However, concerns about the possibility of violence undermining the development process remain vivid across parts of the region: for example, the security situation in Afghanistan remains volatile; and the unstable security and political situation in Nepal is stalling further development there."

The report says, that economic growth in the region is relatively strong, but human development is uneven, both within and across countries.

"South Asia has the world's highest illiteracy rate (45%), and the region accounts for one-third of all maternal deaths in the world. Given South Asia's size, reducing poverty and achieving the Millennium Development Goals in the region will be critical to achieving the goals worldwide."