Asian Development Bank Raises India’s GDP Growth Forecast

The Asian Development Bank (ADB) has raised India’s GDP growth forecast for the current fiscal year (FY25) to 7% from the previous estimate of 6.7%. This growth will be driven by robust investment in public and private sectors, as well as an improvement in consumer demand. For the 2025-26 fiscal, ADB has projected India’s growth at 7.2%. The growth estimates for the current fiscal are lower than the 7.6% estimated GDP expansion in 2022-23 fiscal, where strong investment was the primary driver.

ADB’s Outlook on India’s Economy

• India will remain a “major growth engine” in the Asia and Pacific (APAC) region, according to the ADB.
• Growth will be robust despite moderating in FY2024 and FY2025.
• The triggers for growth in FY2024 will come from higher capital expenditure on infrastructure development, rise in private corporate investment, strong service sector performance, and improved consumer confidence.
• Growth momentum will pick up in FY2025, backed by improved goods exports and an increase in manufacturing productivity and agricultural output.

Risks to India’s Economic Outlook

• Unanticipated global shocks such as supply line disruptions to crude oil markets and weather shocks that impact agriculture output are key risks.
• The overall health of the banking sector remains robust, with the sector continuing to show improved asset quality.

ADB’s Outlook for Developing Economies in Asia and the Pacific

• ADB forecast GDP to expand by 4.9% on average this year for developing economies in Asia and the Pacific.
• The region continues to show resilient growth amid robust domestic demand, improving semiconductor exports, and recovering tourism.
• However, policymakers should remain vigilant as there are risks such as supply chain disruptions, uncertainty about US monetary policy, the effects of extreme weather, and further property market weakness in China.

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