The Asian Development Bank (ADB) has kept India's growth forecast unchanged at 7 per cent in 2024-25 as it sees the country as the fastest growing economy with robust growth in the industrial sector and a rebound in agriculture due to a better monsoon.
The ADB projected India's economy to grow faster at 7.2 per cent in 2025-26, in its report released on Wednesday.
"The outlook for India, the region's fastest-growing economy, is unchanged at 7.0 per cent for fiscal year 2024-25. India's industrial sector is projected to grow robustly, driven by manufacturing and strong demand in construction. Agriculture is expected to rebound amid forecasts for an above-normal monsoon, while investment demand remains strong, led by public investment," the ADB report states.
The announcement comes close on the heels of the International Monetary Fund's upgrade for the growth of the Indian economy to 7 per cent from 6.8 per cent projected in April.
ADB has also raised its economic growth forecast for developing Asia and the Pacific this year slightly to 5.0 per cent from a previous projection of 4.9 per cent, as rising regional exports complement resilient domestic demand. The growth outlook for next year is maintained at 4.9 per cent.
The growth forecast for China, the region's largest economy, is maintained at 4.8 per cent this year. A continued recovery in services consumption and stronger-than-expected exports and industrial activity are supporting the expansion, even as China's struggling property sector has yet to stabilise. The government introduced additional policy measures in May to support the property market.
Inflation is forecast to slow to 2.9 per cent in Asia this year amid easing global food prices and the lingering effects of higher interest rates, according to the latest edition of Asian Development Outlook (ADO), released on Wednesday.
After a post-pandemic recovery that was driven mainly by domestic demand, exports are rebounding and helping propel the region's economic growth. Strong global demand for electronics, particularly semiconductors used for high-technology and artificial intelligence applications, is boosting exports from several Asian economies.
"Most of Asia and the Pacific are 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 towards pre-pandemic levels in the region as a whole, price pressures remain elevated in some economies. 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.
For Southeast Asia, the growth forecast is maintained at 4.6 per cent 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 per cent from a previous projection of 4.3 per cent, 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 per cent growth, driven by tourism and infrastructure spending, along with revived mining activity in Papua New Guinea.
(With inputs from IANS)
