 "Asian Development Bank, ADB")
ADB said that the forward-looking services purchasing managers’ index is well above its long-term average.
The Asian Development Bank (ADB) on Wednesday kept India’s gross domestic product (GDP) growth projection for FY25 unchanged at 7 per cent, citing robust expansion in the industrial sector and strong demand in construction led by housing.
“The stronger-than-expected fiscal position of the central government could provide a further boost to growth. However, this must be weighed against downside risks arising from weather events and geopolitical shocks,” said ADB.
ADB’s July outlook said India’s agriculture sector, which is expected to rebound with forecasts for an above-normal monsoon, will be important to sustain economic growth in rural areas. It said that investment demand led by public investment remains strong.
“Bank credit is fueling robust housing demand and improving private investment demand. However, export growth will continue to be led by services, with merchandise exports showing relatively weaker growth,” said ADB.
It said that the forward-looking services purchasing managers’ index is well above its long-term average.
The International Monetary Fund on Tuesday raised India’s GDP growth projection for FY25 by 20 basis points to 7 per cent in its update to the World Economic Outlook amid a boost in private consumption, especially in rural areas
For FY26, ADB maintained India’s GDP growth projection at 7.2 per cent, as stated in its April outlook.
The GDP expanded at 8.2 per cent in FY24, higher than 7 per cent recorded in FY23, aided by a greater-than-expected expansion of 7.8 per cent in the fourth quarter, according to the provisional estimates released by the National Statistical Office.
The Reserve Bank of India has projected the economy will grow at 7.2 per cent in FY25. India is at the threshold of a “major structural shift” in its growth trajectory, said RBI Governor Shaktikanta Das last month. The country is moving towards a path where annual GDP growth of 8 per cent can be sustained for long, he said.
ADB slightly raised its growth forecast for developing Asia and the Pacific for 2024 to 5 per cent from a previous projection of 4.9 per cent, as rising regional exports complement resilient domestic demand. The growth outlook for 2025 is maintained at 4.9 per cent.
First Published: Jul 17 2024 | 11:27 AM IS