NEW DELHI: Close on the heels of the Reserve Bank slashing India’s GDP growth projection for the current fiscal year to 6.6 per cent from 7.2 per cent, the Asian Development Bank (ADB) has followed suit.
The multilateral lender on Wednesday revised India’s economic growth forecast downward to 6.5 per cent from its earlier estimate of 7 per cent, citing lower-than-expected growth in private investment and housing demand.
The ADB has also trimmed its projection for the following fiscal year, estimating India’s GDP growth at 7 per cent instead of the 7.2 per cent previously forecast. The revisions come amidst concerns over slowing economic activity and stubborn inflationary pressures.
“India’s outlook is adjusted downward due to subdued growth in private investment and housing demand,” ADB noted in its latest Asian Development Outlook (ADO) report.
Agri output up
The bank, however, emphasised that India’s economic growth would remain robust, buoyed by increased agricultural output, resilience in the services sector, and easing crude oil prices in the global market.
The report comes just days after the Reserve Bank revised its GDP growth estimate for FY25 downward, while raising its inflation forecast to 4.8 per cent.
The central bank attributed these changes to a combination of slowing economic momentum and persistent food price pressures. India’s GDP growth had already fallen to a seven-quarter low of 5.4 per cent in the July-September quarter, well below the RBI’s earlier expectation of 7 per cent.
ADB also presented a mixed picture for Asia and the Pacific, lowering the region’s growth forecast for 2024 to 4.9 per cent from 5 per cent. Southeast Asia’s outlook, however, was revised upward to 4.7 per cent for this year, supported by stronger exports and public spending.
China’s remains same
Meanwhile, China’s growth projection remains unchanged at 4.8 per cent for 2024 and 4.5 per cent for 2025.
Despite the challenges, indicators such as PMI data, urban labor force participation rates, and the Reserve Bank’s industrial outlook suggest that India’s economic momentum could recover in the coming quarters, ADB highlighted.
The report underscores the delicate balancing act for policymakers in the region as they navigate global uncertainties, including potential shifts in U.S. trade and fiscal policies under the current administration.
