Asian Development Bank
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New Delhi: The Asian Development Bank (ADB) on Wednesday kept its projection on India’s gross domestic product (GDP) growth for the current financial year unchanged at 7 per cent, but slightly raised its growth forecast for developing Asia and the Pacific for 2024 to 5 per cent from a previous projection of 4.9 per cent announced in April.
In its latest edition of Asian Development Outlook, Manila-headquartered ADB, said that the “stronger-than-expected fiscal position of the central government could provide a further boost to growth” to the Indian economy. “However, this must be weighed against downside risks arising from weather events and geopolitical shocks,” it added.
With 7 per cent projected growth, India will maintain its position as the fastest growing economy in the region. For the financial year 2025-26, ADB has pegged India’s GDP growth at 7.2 per cent. The economic growth projection for the current financial year as well as 2025-26 by ADB in the July report is the same as estimated in the April edition of Asian Development Outlook report.
The ADB forecasts come a day after the International Monetary Fund (IMF) revised up India’s growth projection to 7 per cent from an earlier estimate of 6.8 per cent. While for the current financial year India’s GDP growth projection by ADB and IMF are now the same 7 per cent, for FY 2025-26, the IMF’s projection is 6.5 per cent.
The Indian economy posted a robust 8.2 per cent growth in the financial year ended March 2024, as per the latest official data.
“India’s industrial sector is projected to grow robustly, driven by manufacturing and strong demand in construction. Agriculture is expected to rebound amid forecasts for an above-normal monsoon, while investment demand remains strong, led by public investment,” the ADB said in a statement.
On the revision of the growth projections for Asia and the Pacific, ADB's Chief Economist Albert Park explained, “Most of Asia and the Pacific are seeing faster economic growth compared with the second half of last year.” He further added, “The region’s fundamentals remain strong, but policy makers still need to pay attention to a number of risks that could affect the outlook, from uncertainty related to election outcomes in major economies to interest rate decisions and geopolitical tensions.”
The growth forecast for China, the region’s largest economy, is maintained at 4.8 per cent this year. A continued recovery in services consumption and stronger-than-expected exports and industrial activity are supporting the expansion, even as China’s struggling property sector is yet to stabilize, the multilateral agency noted in the report.
Inflation is forecast to slow down to 2.9 per cent this year in developing Asia and the Pacific region, helped by easing global food prices and the lingering effects of higher interest rates. “While inflation is moderating toward pre-pandemic levels in the region as a whole, price pressures remain elevated in some economies. Food inflation is still high in South Asia, Southeast Asia, and the Pacific, in part due to adverse weather and food export restrictions in some economies,” the report said.