ADB revises India's growth forecast to 7% in this fiscal yr
The Asian Development Bank (ADB) on Thursday revised India’s gross domestic product (GDP) growth forecast for FY25 to 7%, up from its earlier forecast of 6.7%, citing robust public and private investments and a strong services sector.
The Philippines-headquartered regional development bank also expects India to grow at 7.2% in FY26.
The forecast—in the latest edition of the bank’s Asian Development Outlook—said the triggers for growth will come from higher capital expenditure on infrastructure development by both the central and state governments, a rise in private investment, strong services sector performance, and improved consumer confidence.
During FY26, ADB expects India’s growth momentum to pick up on the back of improved goods exports, and an increase in manufacturing and agricultural output.
“Notwithstanding global headwinds, India remains the fastest growing major economy on the strength of its strong domestic demand and supportive policies,” said Mio Oka, ADB’s country director for India. “The government of India’s efforts to boost infrastructure development while undertaking fiscal consolidation and provide an enabling business environment will help in increased manufacturing competitiveness to augment exports and drive future growth,” Oka added.
The regional development bank also expects India’s current account deficit to widen moderately to 1.7% of GDP on rising imports to meet domestic demand.
Foreign direct investment will be affected in the near term due to tight global financial conditions, but will pick up in FY25 with higher industry and infrastructure investment, ADB said.
Goods exports will also be affected by lower growth in advanced economies but pick up in FY26 as global growth improves, it added.
Unanticipated global shocks such as supply line disruptions to crude oil and weather shocks impacting agricultural output are key risks to India’s economic outlook.