The Asia Development Bank (ADB) forecasted that India's economy would increase 6.7% in Fiscal Year 2023-24 (FY24), up from 6.3 percent in September. The lender raised its projection due to India's higher-than-expected GDP growth of 7.6 percent in the second quarter of FY24. "Economic data also show that the industrial sector, which includes manufacturing, mining, construction, and utilities, expanded by double digits." Agriculture is likely to expand slightly slower than predicted in FY2024 overall, but this will be more than offset by industry's substantially stronger-than-expected growth, therefore the upward revision," it said in a study. The ADB's growth prediction for FY25 remains constant at 6.7%.
Fixed investments will compensate for reduced growth in private consumption expenditure and weaker-than-expected exports in FY24, thanks to higher capital expenditures by the central and state governments. The ADB maintained its previous prediction for Indian inflation of 5.5 percent in FY24.
In terms of growth in Developing Asia, which excludes China, the ADB report stated that the outlook is positive despite global problems. It raised the region's growth forecast for calendar year 2023 to 4.9 percent from 4.7 percent previously, citing strong domestic demand. The projection for 2024 is unchanged at 4.8%.
"The revision to the region's 2023 growth projection is driven by an upward adjustment to China's and India's growth projections," said the report's authors.
ADB predicted that China's growth rate will reach 5.2 percent in 2023, up from 4.9 percent in September. China's growth rate is predicted to decrease to 4.5 percent in 2024. In Developing Asia, inflation is expected to fall from 4.4 percent last year to 3.5 percent this year, before rising slightly to 3.6 percent in 2024.
"In advanced economies, downside risks are primarily associated with higher-for-longer interest rates, which may cause financial instability." Supply interruptions from El Nio and the Russian invasion of Ukraine might revive energy and food security concerns, as well as rekindle inflation," according to the ADB.
