ADB retains India's growth forecast at 6.4% for current FY
ADB) Wednesday retained India's economic growth forecast at 6.4% for FY24, on the back of recovery in consumption demand in both rural and urban areas, but said suppressed exports due to global slowdown will be a drag. The Indian economy grew 7.2% in 2022-23. In an update to its Asian Development Outlook (ADO), ADB lowered its inflation projection for current fiscal year (FY24) at 4.9%, from 5% pegged in April, on softening crude oil prices, even though it estimated core inflation to remain «stubbornly high».
«Assuming normal rainfall and other weather factors, and no further geopolitical shocks, India is expected to grow by 6.4% in FY2023 and 6.7% in FY2024, as projected in ADO April 2023,» ADB said. In current fiscal year, consumption demand in India is expected to recover with improvement in both rural and urban demand as reflected in such indicators as consumer confidence, urban unemployment, and motorbike sales. Investment growth will remain robust, underpinned by strong bank credit growth and demand for housing, and supported by fewer interest rate hikes by the central bank.«However, the global economic slowdown has suppressed merchandise trade, which will be a drag on growth.
On the supply side, growth will be buoyed by manufacturing as input prices cool,» ADB said in its July update to the outlook for Asia. With regard to inflation, ADB said as food and oil prices moderated, inflation eased below the 6 % upper tolerance level of the monetary policy. Retail inflation has remained above 6 per cent for most part of 2022.
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