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The Asian Development Bank (ADB) has maintained its forecast for India's GDP growth in the current fiscal year (2024-25) at 7%, projecting continued economic strength. This optimistic outlook is underpinned by factors such as improved agricultural output and recent policy initiatives designed to stimulate employment and job creation. The ADB anticipates that India's GDP will further accelerate in the coming quarters, driven by a robust outlook for both industry and services sectors.
The ADB's September report highlights the positive impact of increased private consumption, fueled by rural spending bolstered by stronger agriculture, and sustained high urban consumption. While the outlook for private investment remains positive, the report predicts a moderation in growth of public capital expenditure in FY2025. Despite a slight upward revision to the FY2024 inflation forecast due to higher food prices, the outlook for FY2025 remains stable, with the expectation that core inflation will rise as food inflation moderates.
The ADB's forecast also includes a positive projection for India's export performance in the current fiscal year, driven by a surge in services exports, particularly in the IT and professional services sectors. However, growth in merchandise exports is expected to be relatively muted in the coming fiscal year. Despite these positive projections, the ADB acknowledges that efforts toward fiscal consolidation are expected to drive down the fiscal deficit to pre-COVID-19 levels. This outcome reflects robust revenue collection and restrained current expenditure.
Turning to China, the ADB has kept its growth forecast for the year at 4.8%, falling short of the Xi Jinping-led government's official target of around 5%. The country's GDP growth for 2025 is projected at 4.5%. China, the world's second-largest economy, has been grappling with deflationary pressures and has implemented various policy measures aimed at stimulating domestic spending to boost growth. However, the persistent weakness in the property sector has negatively impacted household spending in 2024. This decline has been partially offset by increased investment, driven by stimulatory monetary and fiscal policies, and higher exports.
The ADB's growth forecast for Asia as a whole stands at 5% for the current year, a slight increase from the 4.9% projection made in April. The forecast for next year has been retained at 4.9%. The report also indicates that inflation in developing Asia and the Pacific is expected to ease further to 2.8% in 2024, down from the previous forecast of 3.2%.
Source: ADB retains India's 2024-25 growth forecast at 7%, but here's what it projects for China