ADB Maintains India's Economic Growth Forecast at 7% for 2024

The Asian Development Bank (ADB) has kept India's economic growth forecast at 7% for fiscal year 2024, citing robust industrial growth and resilient agriculture. ADB adjusted its forecast for developing Asia and the Pacific to 5%, noting regional export growth and domestic demand. Inflation is expected to slow to 2.9% this year.

The Asian Development Bank (ADB) has maintained its projection of a 7 percent economic growth rate for India for the fiscal year 2024, according to the latest Asian Development Outlook. India has been identified as the fastest-growing economy in the region. The report highlights robust growth in India's industrial sector, credited to strong manufacturing and construction demand. Additionally, the agriculture sector is predicted to rebound due to forecasts of an above-normal monsoon, and investment demand continues to be strong, bolstered by public investment.

In a related update, the ADB has slightly raised its economic growth forecast for developing Asia and the Pacific to 5.0 percent, up from an earlier projection of 4.9 percent. This adjustment is attributed to increasing regional exports and resilient domestic demand. The growth outlook for the next year remains steady at 4.9 percent. Inflation is expected to decelerate to 2.9 percent this year, influenced by easing global food prices and the lingering effects of higher interest rates. Initially driven by a post-pandemic recovery in domestic demand, rebounding exports are now contributing to the region's economic growth. Strong global demand for electronics, particularly semiconductors, is bolstering exports from several Asian economies.

"Most of Asia and the Pacific is experiencing faster economic growth compared to the latter half of last year. While the region's fundamentals remain strong, policymakers must remain vigilant to several risks that could impact the outlook, including uncertainties related to upcoming election outcomes in major economies, interest rate decisions, and geopolitical tensions," noted ADB Chief Economist Albert Park. The ADB also pointed out that despite a moderation in regional inflation towards pre-pandemic levels, price pressures remain high in certain areas. Food inflation remains significant in South Asia, Southeast Asia, and the Pacific, exacerbated by adverse weather conditions and food export restrictions.

The growth forecast for the People's Republic of China (PRC), the region's largest economy, is sustained at 4.8 percent for this year. The ongoing recovery in services consumption, stronger-than-expected exports, and industrial activity are supporting the expansion, despite continuing challenges in the PRC's property sector. Additionally, the government introduced policy measures in May to support the struggling property market.

(With inputs from agencies.)