Citing tepid economic growth in the first half, demonetisation and transitory challenges of GST, an international development finance institution, the Asian Development Bank (ADB) has scaled down its current fiscal year gross domestic product (GDP) growth forecast for India to 6.7% from prior estimate of 7%. However, it expects GDP to pick up in remaining two quarters of FY18 with the implementation of the government’s structural reform measures like bank recapitalization and easement in compliance of GST.
ADB also revised GDP growth forecast for next fiscal year (FY19) to 7.3%, down from the earlier forecast of 7.4%. In its latest outlook report, ADB noted that even if the economy reversed from 5 consecutive quarters of deceleration in the second quarter of fiscal year 2017, the rebound in the economy was weaker than expected due to rising crude oil prices, soft private investment growth, and weather-related risks to agriculture.
For overall developing Asia, ADB raised its economic growth estimate to 6% for this year from a previous estimate of 5.9%, on the back of stronger exports and domestic consumption fuel growth and excluding Asia’s newly industrialized economies, growth is expected at 6.5% this year.