On Wednesday, the Asian Development Bank (ADB) maintained India's GDP growth prediction for FY25 at 7%, noting robust industrial expansion and high demand in construction, led by housing. "The central government's better-than-expected fiscal condition may provide an additional lift to growth. However, this must be balanced against the risks posed by weather catastrophes and geopolitical shocks," stated ADB.
According to the ADB's July outlook, India's agriculture sector would be critical to sustaining economic growth in rural areas, since it is likely to revive due to above-normal monsoon conditions. It stated that investment demand, driven by governmental investment, remained high.
"Bank lending is driving strong housing demand and boosting private investment demand. However, services will continue to drive export development, while merchandise exports would rise at a slower pace," according to the ADB. It stated that the forward-looking services purchasing managers' index is significantly higher than its long-term average.
The International Monetary Fund on Tuesday upped India's GDP growth prediction for FY25 by 20 basis points to 7% in its update to the World Economic Outlook, citing an increase in private consumption, particularly in rural regions.
The ADB maintained India's GDP growth prediction for FY26 at 7.2%, as announced in its April outlook. According to provisional estimates issued by the National Statistical Office, GDP rose at 8.2 percent in FY24, up from 7% in FY23, buoyed by a stronger-than-expected expansion of 7.8 percent in the fourth quarter.
The Reserve Bank of India expects the GDP to grow at 7.2 percent in FY25. Last month, RBI Governor Shaktikanta Das stated that India is nearing a "major structural shift" in its growth trajectory. He stated the country is on track to achieve yearly GDP growth of 8% for the foreseeable future. ADB boosted its 2024 growth forecast for developing Asia and the Pacific to 5% from 4.9% before, as expanding regional exports support resilient domestic demand. The growth forecast for 2025 remains at 4.9 percent.
