ADB retains India’s growth forecast at 7.3% for FY19

“Growth momentum continues in India on a rebounding of exports and higher industrial and agricultural output. Growth is predicted at 7.3 per cent in 2018 and 7.6 per cent in 2019.

“India saw GDP growth moderate to 7.1 per cent in Q2 of FY2018 (ending March 31, 2019) from 8.2 per cent in Q1,” ADB said in its Asian Development Bank Outlook Supplement released today.

The slowdown came mainly from food prices, lower rural consumption, rising oil prices delivering a negative shock in terms of trade, and rising costs for raw materials.

“Nonetheless, growth forecasts of 7.3 per cent for 2018-19 and 7.6 per cent for 2019-20 are retained from the update despite some downside risks,” ADB said in the supplement.

Growth in the People’s Republic of China (PRC), the second largest economy in the world, is still expected at 6.6 per cent in 2018, moderating to 6.3 per cent next year. 

“The truce on trade tariffs agreed by the United States and the People’s Republic of China (PRC) is very welcome but the unresolved conflict remains the main downside risk to economic prospects in the region,” said ADB chief economist Yasuyuki Sawada. “That said, we are keeping our forecasts for the region’s growth unchanged for this year with some of the biggest economies continuing to hold up well.”

Economies in developing Asia and the Pacific are weathering external challenges thanks to robust domestic demand, while inflationary pressures are abating, says the new report from the ADB.

ADB retained its regional growth forecast for 2018 at 6.0 per cent and for 2019 at 5.8 per cent. Excluding the newly industrialised economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, ADB maintained the regional growth outlook at 6.5 per cent for 2018 and 6.3 per cent for 2019.

Lower international commodity prices and central bank action to calm market volatility means inflation in developing Asia is forecast to be 2.6 per cent in 2018 and 2.7 per cent in 2019, down from 2.8 per cent previously forecast for both this year and next, ADB stated.

Gross domestic product growth in Central Asia in 2019 is now forecast to grow at 4.3 per cent, up from the 4.2 percent forecast in September, as a recovery in public investment and higher output from the Shah Deniz gas field enhance prospects in Azerbaijan. South Asia’s 2019 growth is now pegged at 7.1 per cent versus the 7.2 per cent forecast in September. Southeast Asia is expected to grow 5.1 per cent in 2019 versus the previous forecast of 5.2 per cent. The Pacific is on track to expand 3.1 per cent in 2019.