ADB scales down India’s growth forecast

Spike in Covid-19 cases during May dented recovery

The Asian Development Bank yesterday revised down India’s economic growth forecast for the current fiscal to 10 per cent, from 11 per cent predicted earlier, citing the adverse impact of the second wave of the pandemic.

The growth forecast for India in fiscal year 2021 (ending in March 2022) was revised down, as the spike in Covid-19 cases during May dented the recovery, the Asian Development Bank (ADB) said in its latest economic outlook.

“The outbreak, however, dissipated faster than anticipated, resulting in several states easing lockdown measures and returning to more normal travel patterns. The economy is expected to rebound strongly in the remaining three quarters of FY2021, and grow by 10 per cent in the full fiscal year before moderating to 7.5 per cent in FY2022,” said the Asian Development Outlook Update (ADOU) 2021.

In its Asian Development Outlook forecast in April this year, the multilateral funding agency had projected India to grow at 11 per cent in the current fiscal year.

“Because consumption will recover only gradually, government spending and exports will contribute more to FY2021’s growth than they did in the previous fiscal year,” it said about India.

About the region, it said the outlook varies across South Asia. South Asia comprises Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.

The subregion is projected to expand more slowly this year than earlier projected, but faster next year, it said.

China outlook

According to ADB, growth in the People’s Republic of China (PRC) will remain strong, despite a protracted recovery in household consumption.

“The GDP growth forecast remains unchanged at 8.1 per cent in 2021 and 5.5 per cent in 2022, as a solid export performance and higher fiscal support in the second half of 2021 keep growth on track,” it said on China.

Growth paths in developing Asia continue to diverge, as some nations struggle to contain virus outbreaks while those that avoided tough restrictions or have advanced vaccination campaigns gain from stronger global demand, according to the Asian Development Bank.

The region’s gross domestic product will expand 7.1 per cent this year, down from 7.3 per cent forecast in April and a turnaround from last year’s 0.1 per cent contraction, the ADB said. It sees developing Asia’s growth moderating to 5.4 per cent in 2022. “Developing Asia remains vulnerable to the Covid-19 pandemic,” Joseph Zveglich, acting chief economist at ADB, said in an accompanying statement.