ADB retains India’s growth forecast of 6.4% in FY24
Retaining its earlier forecast, the Asian Development Bank (ADB) on Wednesday said India’s GDP is expected to grow by 6.4% in the ongoing financial year and 6.7% in FY25, driven by recovery in consumption demand and easing global commodity prices. The projections released by ADB were close to the Reserve Bank’s estimates of 6.5% real GDP growth for 2023-24. The ADB projections assume “normal rainfall and other weather factors, and no further geopolitical shocks".
However, it added that the global economic slowdown has suppressed merchandise trade, which could be a drag on growth. India’s goods exports have been declining for the last five months amid falling demand in the West. Exports from developing Asia weakened in the first quarter of 2023 as global demand slowed.
However, consumption and investment are projected to boost aggregate regional growth to 4.8% in 2023, as earlier forecast, with the forecast for 2024 revised down only marginally to 4.7%, ADB stated. As far as inflation is concerned, 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% for most part of 2022.
As per the latest data, it was 4.81% in June 2023. “Expected softening of Brent crude prices in 2023 should lower headline inflation, but core inflation, which excludes food and fuel, is expected to be stubbornly high," ADB said. The bank added that while crude oil prices are expected to climb in the remainder of this year, steep price drops in April and May will depress the average price.
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