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The Asian Development Bank has lowered India’s growth forecast to 7 per cent for 2017-18 from its earlier estimate of 7.4 per cent owing to weak private consumption and business investment and muted manufacturing output. It has also scaled down its outlook for 2018-19 at 7.4 per cent from the previous projection of 7.6 per cent.
The projections, which are part of the update to the Asian Development Outlook 2017 that was released in April, also factor in the first quarter GDP growth that was at a three-year low of 5.7 per cent.
Inflation, on the other hand, is expected to average 4 per cent this fiscal and 4.6 per cent next fiscal, significantly lower than the previous estimates of 5.2 per cent and 5.4 per cent, respectively.
PTI adds:
However, the multilateral lender said India continues its strong showing although demonetisation and implementation of the new goods and services tax regime have dented consumer spending and business investment. These short-term disruptions, ADB stated, are expected to dissipate allowing these initiatives to generate growth dividends over the medium term.
The latest ADB report remains sanguine for much of the developing Asia in growth metrics as a result of the broad-based recovery in global trade, robust expansion in major industrial economies and improved prospects of China. This will all combine to push growth in the developing Asia for 2017 and 2018 above previous projections, it added.
According to ADB Chief Economist Yasuyuki Sawada, growth prospects for the developing Asia are looking up, bolstered by a revival in world trade and strong momentum in China. “Countries in developing Asia should take advantage of favourable short-term economic prospects to implement productivity-enhancing reforms, invest in badly needed infrastructure, and maintain sound macroeconomic management to help increase their long-term growth potential,” he added.
ADB said loose fiscal policy in the US and lower oil prices are potential upside risks to the region while downside ones include tighter global liquidity, economic disruption from a geo-political event, or a weather-related disaster.
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