ADB raises India’s GDP growth forecast to 6.7%

NEW DELHI: Asian Development Bank (ADB) on Wednesday raised its forecast for India’s economic growth rate to 6.7 per cent for 2023-24 from 6.3 per cent that it had predicted in September.

The upward revision is based on India’s higher-than-expected 7.6 per cent GDP growth in the July-September quarter of the current financial year.

"The ADB also factors in the double-digit growth in the industrial sector. Although agriculture is expected to grow slightly slower than expected, this will be more than offset by industry’s much stronger-than-expected growth, hence the upward revision,” the report stated.

However, ADB has left its growth forecast for 2024-25 unchanged at 6.7 per cent.

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 203-24, the report said.

At the same time, ADB has kept its earlier forecasts on India’s inflation unchanged at 5.5 per cent for the current financial year.

ADB also projected growth in China to reach 5.2 per cent in 2023, an increase from the previous forecast of 4.9 per cent made in September. China in 2024 is expected to slow down to 4.5 per cent.

ADB also revised the Asian region’s growth projection to 4.9 per cent for the calendar year 2023 from 4.7 per cent earlier, citing robust domestic demand. The forecast for 2024 is maintained at 4.8 per cent.

“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.

The ADB also sees downside risks going ahead, mainly associated with higher-for-longer interest rates in the advanced economies, which could trigger financial instability.

“Possible supply disruptions from El Nino and the Russian invasion of Ukraine could renew energy and food security challenges, and rekindle inflation,” the report added.