ADB lowers India’s growth forecast to 6.5% for FY20
COMEBACK TRAIL ADB expects India to rebound to 7.2% growth in fiscal 2021
NEW DELHI: The Asian Development Bank (ADB) on Wednesday sharply lowered India’s growth forecast to 6.5% from 7% projected in July for the current fiscal, though has it indicated that the country will grow faster than China.
The multilateral l ending agency in its Asian Development Outlook (ADO) Update for 2019 cut the growth projection for India, which recorded an over six-year low growth of 5% in April-june quarter this fiscal.
“India’s growth forecast for fiscal year 2019 is lowered to 6.5% after growth slowed markedly to 5% in the first quarter, AprilJune. Abrupt declines in manufacturing and investment reflect uncertainty ahead of General Elections, subdued lending by banks and other financial institutions, stress in the rural economy, and a weakening external outlook,” the agency said.
However, India is expected to rebound to 7.2% growth in fiscal 2021 and join most other sub-regional countries in performing at or near their ADO 2019 growth forecasts for next year, it added.
The Manila-headquartered funding agency had projected India’s economy to expand at 7.2% in its ADO for FY20 released earlier in April this year and cut it down to 7% in the supplement to the ADO in July.
With respect to China, ADB has projected that growth will slip from 6.6% last year to 6.2% in 2019, and 6% in 2020—below previous p r o j e c t i o n s — wi t h increased government spending and a strong housing market partly offsetting the impact of the trade dispute with the US and
INDIA’S GROWTH FORECAST FOR FY19 IS LOWERED AFTER GROWTH SLOWED MARKEDLY TO 5% IN THE FIRST QUARTER
sluggish manufacturing investment.
“In Hong Kong, China, recent political tensions, spill-over from the trade conflict, and the global electronics downturn will slow growth in 2019 and 2020 well below ADO 2019 projections,” it said further.
On South Asian growth projections, the Asian Development Outlook Update said the growth momentum has softened in the region.
“Growth forecasts are lowered to 6.2% for 2019 and 6.7% for 2020.
“Growth in South Asia is now seen moderating this year as India’s economy slows primarily for domestic reasons, such as the pre-election decline in investment and tighter credit conditions,” it said.
Further, South Asia inflation forecast is lowered, largely reflecting unexpectedly low food prices in India, but the forecast for 2020 is maintained, as per the Asian Development Outlook Update.
Asia girds for prolonged uncertainty, Asian Development Bank said, adding the regional growth remains robust but is expected to moderate.
“GDP (gross domestic product) expansion in the region, though still strong, is projected to slow from 5.9% in 2018 to 5.4% this year, then edge back up to 5.5% next year,” it added.
The revisions reflect gloomier prospects for international trade, in part because of re-escalation in trade conflict between the US and China, and evidence o f s l o wi n g g r o wt h in the advanced economies and China, as well as in India and the larger economies in east and SouthEast Asia.
Developing Asia will also have to deal with slightly higher prices due to rising food costs, the ADB said. It raised its 2019 and 2020 inflation forecasts for the region to 2.7% from 2.6% earlier.