ADB raises India's FY24 growth forecast to 6.7% from 6.3%

The Asian Development Bank (ADB) has raised its forecast for India's economic growth rate to 6.7 per cent for Financial Year 2023-24 from 6.3 per cent that it had announced in September.

The upward revision is based on India’s higher-than-expected gross domestic product (GDP) growth of 7.6 per cent in the September quarter.

“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,” ADB said in its latest report.

Meanwhile, ADB's growth forecast for FY25 remained unchanged at 6.7 per cent.

"On the demand side, higher growth in fixed investment — driven by increased capital spending by the central government and state governments — will compensate for lower growth in private consumption expenditure and weaker-than expected exports," the report stated.

ADB kept its earlier forecasts on India’s inflation unchanged at 5.5 per cent in FY24.

Meanwhile, ADB also revised the Developing Asia’s growth projection to 4.9 per cent for the calendar year 2023 from 4.7 per cent earlier, on account of robust domestic demand.

"The revision to the region’s 2023 growth projection is driven by an upward adjustment to China’s and India’s growth projections. Growth is also revised up for the Caucasus and Central Asia. But Southeast Asia will grow slower than expected due to downward revisions for Malaysia, Thailand, and Vietnam," the report said.

Developing Asia’s inflation is forecast to decline from 4.4 per cent last year to a downward-adjusted 3.5 per cent this year, before rising slightly to 3.6 per cent 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.

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