The Asian Development Bank (ADB) has pared its 2022-23 growth projection for India’s economy to 7% from 7.5% estimated in April, terming it a “modest downward revision” driven by higher-than-anticipated inflation and monetary tightening. The Bank also raised its inflation forecast for India to 6.7% for this year, while widening its current account deficit (CAD) estimate to 3.8% of GDP. The CAD is expected to drop to 2.1% of GDP in 2023-24 while inflation will moderate to 5.8% as demand pressures from strengthening economic activity are tamped down by easing supply bottlenecks, the Bank reckoned.
China’s economy will record lesser growth than the rest of developing Asia for the first time in three decades, the Bank said in an update to its Asia Development Outlook (ADO) on Wednesday, at 3.3% in 2022, from 5% forecast earlier, marred by lockdowns triggered by its zero-Covid strategy, property sector problems and weaker external demand.
For 2023, the Bank forecast growth of 4.5% for China compared to 4.8% previously projected, due to ‘deteriorating external demand continuing to dampen investment in manufacturing.
The lower growth hopes for India along with a sharp contraction in Sri Lanka, ADB said, translate into slower growth for South Asia at 6.5% in 2022, from 7% projected earlier and 6.5% growth in calendar year 2023, compared to its previous estimate of 7.4%. India accounts for 80% of the region’s economy.
While growth will be lower, ADB expects inflation in South Asia to be pushed up by higher energy and food costs to 8.1% in 2022 and 7.4% in 2023. It had earlier estimated inflation to be 6.5% in 2022 and 5.5% in 2023, and said the upward revisions mainly reflect surging global commodity prices accelerating inflation in India, Pakistan, and Sri Lanka.
Important Takeaways for All Competitive Exams:
- Asian Development Bank Headquarters: Mandaluyong, Philippines;
- Asian Development Bank Founded: 19 December 1966;
- Asian Development Bank President: Masatsugu Asakawa (from 17 January 2020).