ADB cuts India's growth forecast to 6.7 per cent

ADB slashes India growth forecast for 2017-18 to 6.7

The Asian Development Bank (ADB) has upgraded its gross domestic product (GDP) growth forecasts for the Philippines this and next year on the surge of the government's infrastructure program.

Moody's last month projected India's real GDP growth to moderate to 6.7 per cent in the current fiscal, from 7.1 per cent previous year.

The Asian Development Bank (ADB) has revised downwards India's growth forecast for FY18 and FY19 to 6.7 per cent and 7.3 per cent, respectively, primarily due to the lingering impact of demonetisation, teething troubles in GST and seasonal weather-borne risks to agricultural output.

This is part of ADB's forecast on economic expansion of developing Asia, which showed the GDP of the first three quarters of 2017 in Việt Nam grew by 6.4 per cent, up from 5.9 per cent in the same period of 2016.

"Developing Asia's growth momentum, supported by recovering exports, demonstrates that openness to trade remains an essential component of inclusive economic development", ADB chief economist Yasuyuki Sawada said in a statement yesterday.

Combined growth for the major industrial economies has been revised upward to 2.2 per cent for 2017 and 2 per cent for 2018 due to robust domestic demand in the euro area, and in Japan due to private investment and net exports.

However, the growth outlook for the region is still expected to slow slightly to 5.8% in 2018.

ADB's downward revision comes weeks after GDP growth numbers for the second quarter of the current financial year were released, which saw the economy reversing a five-quarter decline in growth to 5.7 per cent in the first quarter.

"Countries can further take advantage of the global recovery by investing in human capital and physical infrastructure that will help sustain growth over the long-term", he added.

Gross fixed investment more than tripled its growth rate over previous year with the implementation of several large projects in the service and manufacturing sectors and higher spending by public corporations, driving double-digit growth in imports.

According to Standard & Poor's, India's growth is among the fastest of all investment-grade sovereigns and projected real GDP expansion to average 7.6 per cent over 2017-20.

"Infrastructure investment continued to play important roles in Indonesia, the Philippines and Thailand".

Private investment is showing strong signs of recovery in line with 4.3% third-quarter growth in manufacturing production, the highest rate recorded in 18 quarters.

Further, the ADB said rising commodity prices have not yet driven inflation across the region, with consumer price inflation tame and stable.

The National Economic and Social Development Board, the state planning unit, has lifted its GDP growth estimate to 3.9% this year and forecasts economic growth in a range of 3.6-4.6% next year.

ADB also retained its inflation projections for the Philippines at 3.2% this year and 3.5% in 2018.

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