ADB retains India\'s growth forecast at 7 pc in FY23, 7.2 pc in FY24
CHENNAI: Asian Development Bank has retained India’s growth forecast for FY23 at 7 per cent and FY24 at 7.2 per cent. Inflation in India is expected to rise to 6.7 per cent in FY23 before falling back to 5.8 per cent.
Despite recent global headwinds, the Indian economy is expected to grow by 7 per cent, as projected earlier, supported by a strong domestic base.
In India, the economy grew by 6.3 per cent in Q2 of FY2023, reflecting contraction in public consumption of 4.4 per cent even as exports grew by 11.5 per cent despite the global slowdown.
Among the developing economies of Asia, lower export orders point to continued weakness going forward. Among the 11 economies for which data on new export orders is available with ADB, 10 recorded readings below 50 in November, indicating declines from the previous month. However, India was the only exception.
Similarly, PMI readings indicated softening economic activity in most economies, while India saw it improving in November.
On the supply side, growth in FY23 was led by service sector growth at 9.3 per cent, contributing 4.6 percentage points to GDP growth. Industry, by contrast, suffered a small contraction by 0.8 per cent, ADB said in its latest estimate.
Going ahead, some recent high-frequency indicators are more favourable than expected. This includes, consumer confidence, electricity supply, and purchasing managers’ indexes. However, others are a little less favourable, in particular exports, largely textiles and iron ore, and the index of industrial production of consumer goods. ADB has retained the growth forecast for FY24 at 7.2 per cent, sustained by positive effects from structural reform and from public investment catalyzing private investment.
ADB also expects India’s inflation to rise to 6.7 per cent in FY23 before falling back to 5.8 per cent, as projected earlier. For 22 of the 28 economies in developing Asia with monthly inflation data, inflation has now come down from peaks reached earlier in the year, including in the largest economies like China, India, Indonesia and the Republic of Korea. In India, monthly inflation was 7.4 per cent in September and it has cooled down to 6.8 per cent in October.
However, in contrast, the inflation projection for South Asia is increased marginally for 2022 from 8.1 per cent to 8.2 per cent and more substantially for 2023 from 7.4 per cent to 7.9 per cent. The sub-regional revision for 2023 largely reflects higher inflation forecasts for Bangladesh, Nepal, Pakistan, and Sri Lanka.
