Welcome to Foreign Policy’s South Asia Brief.
After a tumultuous year, South Asia will be looking to bounce back with a smoother 2026. Unfortunately, the region enters the new year facing serious risks of political and economic instability as well as regional conflict as it grapples with the unsettling impacts of a volatile world order.
Welcome to Foreign Policy’s South Asia Brief.
After a tumultuous year, South Asia will be looking to bounce back with a smoother 2026. Unfortunately, the region enters the new year facing serious risks of political and economic instability as well as regional conflict as it grapples with the unsettling impacts of a volatile world order.
Below are five storylines to watch that will shape South Asia’s trajectory for the coming year—and perhaps beyond.
Crucial Elections in Bangladesh and Nepal
Bangladesh and Nepal will hold high-stakes national elections early in 2026. Both are the first polls since mass uprisings ousted unpopular leaders—former Bangladeshi Prime Minister Sheikh Hasina and former Nepali Prime Minister K.P. Sharma Oli—but each nation has taken a different path to get there.
Bangladesh’s interim government, which took office in August 2024, initially focused on pursuing ambitious reforms and waited a year to announce an election date, now set for Feb. 12. Nepal’s provisional administration assumed power in September and immediately announced a timeline for polls—scheduled for March 5. It has zeroed in on election preparations.
If a critical mass of voters in each country conclude that their election isn’t credible, or if they don’t like the government that it brings to power, there is real risk of fresh unrest. Bangladesh and Nepal both have highly charged political environments. Mobilized young people brought down the previous leaders and see elections as a crucial next step to restore good governance and democracy.
If these young leaders conclude that their expectations haven’t been met, then they will likely return to the streets. India and China, which have important relations with both countries, will watch the elections closely.
Pakistan and Its Neighbors
This year, Pakistan had a brief military conflict with India and came close to one with Afghanistan. Islamabad faces a risk of hostilities with both neighbors in 2026. India-Pakistan relations are tenser than they have been in decades, and a single trigger—a terrorist attack, a cross-border incursion, an Indian dam-building project—could provoke another conflict.
Meanwhile, Pakistan has been unable to convince or compel the Taliban regime in Afghanistan to curb terrorist groups that have staged increasing cross-border attacks. This has raised the specter of sustained Pakistani military operations in Afghanistan to root out militants—and the Taliban retaliating by mobilizing militants to carry out strikes against Pakistan.
Mediation efforts by Qatar, Saudi Arabia, and Turkey failed to quell Afghanistan-Pakistan tensions, though these countries will likely keep trying next year. U.S. President Donald Trump has said he wants to mediate between India and Pakistan, but New Delhi’s rejection of third-party involvement will preempt that possibility.
Ultimately, in each case, the difficult task of keeping tensions at a manageable level will fall to Pakistan and its neighbors, not to external actors.
The Maldives’ Economy
Two of the world’s most serious economic crises in recent years originated in South Asia. In 2022, Sri Lanka defaulted on its debt, and Pakistan narrowly avoided the same fate in 2023. Now, the Maldives faces major macroeconomic stress—and if it doesn’t mitigate this stress, it could spark concerns about becoming the next Sri Lanka.
In October, the World Bank warned that the Maldives faces a “high risk of debt distress” because of foreign exchange shortages, insufficient financing options, and large debt service obligations (thanks in great part to hefty Chinese loans). Public debt is projected to approach 135 percent of the country’s GDP in the next year.
In both Sri Lanka and Pakistan, severe debt and shrinking foreign exchange reserves were major triggers for the economic meltdowns.
The good news for the Maldives is that it has so far fended off a bigger crisis through robust tourism revenue and recent infusions of assistance from key partners such as India. But with the country’s economy remaining so vulnerable, potential new external shocks—from spikes in global commodity costs to sudden interruptions in tourist revenue—could spell big trouble.
Modi’s Future
Indian Prime Minister Narendra Modi attends a tribute ceremony at San Martín Square in Buenos Aires on July 5.Tomas Cuesta/Getty Images
Political change has been a consistent trend in South Asia in recent years—but not in India. Prime Minister Narendra Modi, first elected in 2014, is the longest-serving democratically elected leader in the region. Next year, there will be growing speculation about Modi’s political future—and especially about whether he will run for a fourth straight term in 2029.
Modi remains very popular, and his party won several key state elections in 2025—strong retorts to critics who hope that the worse-than-expected electoral performance of the ruling Bharatiya Janata Party (BJP) in 2024 signaled the beginning of his demise.
Modi’s supporters will be able to further push back against concerns about anti-incumbency sentiment if the BJP triumphs in another series of state elections next year—including a few in India’s south, where the party isn’t as strong. There is no indication so far that Modi is preparing for retirement, but in 2026, observers will watch closely for signals about potential big changes.
Trump’s China Policy
The policy direction the Trump administration takes next year on China will have significant implications for South Asia. So far, the White House hasn’t articulated a coherent strategy toward Beijing, as Trump has signaled a desire to both compete and cooperate with China.
Trump’s ultimate approach will affect the floundering U.S.-India relationship, where a shared desire to counter China has long served as strategic glue. If Washington takes a more moderate view toward Beijing, and especially if Trump reaches an understanding with Chinese President Xi Jinping, then U.S.-India ties could face another big challenge in 2026.
U.S. policymakers have recently tended to view South Asia through the lens of great-power competition. Washington’s Indo-Pacific policy—initiated during Trump’s first term—has focused on generating incentives for South Asian countries to reduce dependence on Beijing, from U.S. infrastructure deals to arms packages. A softer U.S. policy toward China would mean less pressure on them.
Such a shift would likely be received positively in many South Asian capitals as leaders seek to balance ties with the United States and China. But it could also lead to a U.S. push to reduce trade imbalances that don’t favor Washington.
