Manila-based Asian Development Bank (ADB) has kept India's economic growth forecast unchanged at 7% for the financial year 2024-25 and at 7.2% for FY26, the latest July edition of the Asian Development Outlook shows. "The outlook for India, the region’s fastest-growing economy, is also unchanged at 7.0% for fiscal year 2024. India’s industrial sector is projected to grow robustly, driven by manufacturing and strong demand in construction," says the organisation that represents 68 members of Asia and the Pacific.
For India, says ADB, agriculture is expected to rebound amid forecasts for an above-normal monsoon, while investment demand remains strong, led by public investment. ADB's economic growth forecasts are largely in line with the forecast of the Reserve Bank of India (RBI), which in its June 7, 2024, monetary policy committee meeting, revised the country's growth forecast to 7.2% in FY25.
ADB has slightly raised its economic growth forecast for developing Asia and the Pacific this year to 5% from a previous projection of 4.9%, as rising regional exports complement resilient domestic demand. The growth outlook for next year is maintained at 4.9%.
For Southeast Asia, ADB's growth forecast is maintained at 4.6% this year amid solid improvements in both domestic and external demand. This year’s outlook for the Caucasus and Central Asia is raised to 4.5% from a previous projection of 4.3%, driven in part by stronger-than-expected growth in Azerbaijan and the Kyrgyz Republic. In the Pacific, the outlook for 2024 is maintained at 3.3% growth, driven by tourism and infrastructure spending, along with revived mining activity in Papua New Guinea.
Inflation is forecast to slow to 2.9% this year amid easing global food prices and the lingering effects of higher interest rates, ADB's ADO report says. “Most of Asia and the Pacific is seeing faster economic growth compared with the second half of last year,” said ADB Chief Economist Albert Park. “The region’s fundamentals remain strong, but policymakers 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.”
While inflation is moderating toward pre-pandemic levels in the region as a whole, price pressures remain elevated in some economies, the report adds. "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 growth forecast for China, the region’s largest economy, is maintained at 4.8% this year amid continued recovery in services consumption and stronger-than-expected exports and industrial activity.
This week, the US-based International Monetary Fund (IMF) also upgraded India's GDP forecast by 0.2 basis points to 7% for 2024-25, driven by improved private consumption. The IMF says the forecast for growth in India has also been revised upward with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas. The IMF has kept India's real GDP projections unchanged for the next fiscal year (2025-26) at 6.5%.
