Economy: ADB upgrades India’s GDP growth to 6.7% in FY24

Virendra Pandit 

New Delhi: Unlike China, whose GDP growth in FY24 is expected to slow down to 4.5 percent, the Asian Development Bank (ADB has raised India’s GDP growth forecast from 6.3 percent in September to 6.7 percent now.

The ADB on Wednesday said India’s economy would grow 6.7 percent in Financial Year 2023-24 (FY24), raising the estimate from the 6.3 percent it made in September.

The lender revised its estimate based on India’s higher-than-expected gross domestic product (GDP) growth, of 7.6 percent, in the second quarter of FY24.

“Economic data also indicate the industrial sector in particular, including manufacturing, mining, construction, and utilities, grew by double digits. For FY2024 as a whole, agriculture is expected to grow slightly slower than expected, but this will be more than offset by industry’s much stronger-than-expected growth, hence the upward revision,” it said in a report.

However, the ADB’s growth forecast for FY25 remains unchanged at 6.7 percent.

Fixed investments, driven by increased capital spending by the Central and state governments, will compensate for lower growth in private consumption expenditure and weaker-than-expected exports in FY24, it said.

The ADB  kept its earlier forecasts on Indian inflation unchanged at 5.5 percent in FY24.

Citing growth in Developing Asia, excluding China, the ADB’s report said the outlook is upbeat despite global challenges. It revised the region’s growth projection to 4.9 per for the calendar year 2023 percent from 4.7 percent earlier, citing robust domestic demand. The forecast for 2024 is maintained at 4.8 percent.

“The revision to the region’s 2023 growth projection is driven by an upward adjustment to China’s and India’s growth projections,” the report said.

It projected growth in China to reach 5.2 percent in 2023, an increase from the previous forecast of 4.9 percent in September. In 2024, China is expected to slow down to 4.5 percent.

Inflation in Developing Asia is forecast to decline from 4.4 percent last year to a downward-adjusted 3.5 percent this year, before rising slightly to 3.6 percent in 2024.

“Downside risks are mainly associated with higher-for-longer interest rates in advanced economies, which could trigger financial instability. Possible supply disruptions from El Niño and the Russian invasion of Ukraine could renew energy and food security challenges, and rekindle inflation,” said ADB.