Downward Revision for India’s Growth from 7.4% in ADO 2017 to 7% in ADO 2017: Update
The Asian Development Bank(ADB) has raised its forecast for gross domestic product growth in developing Asia, comprising 45 countries in Asia Pacific, to 5.9% in 2017 from 5.7% in an update to its Asian Development Outlook 2017. It also has revised its forecast of GDP growth for developing Asia for 2018 to 5.8% from 5.7% in Asian Development Outlook (ADO) 2017. India’s growth is expected to slow to 7% in 2017, from 7.1% in 2016 after a new national goods and services tax dampened manufacturing.
Growth prospects for developing Asia are looking up, bolstered by a revival in world trade and strong momentum in the People’s Republic of China. Excluding the newly industrialized economies, the region is expected to grow by 6.4% this year and 6.3% in 2018.
Rebounds in international food and fuel prices are gentler than expected, helping to contain consumer price pressures. Inflation is likely to dip to 2.4% in 2017, or 0.1 percentage points off the 2016 rate, and pick up to 2.9% in 2018.
Risks to the outlook have become more balanced, as the advanced economies have so far avoided sharp, unexpected changes to their macroeconomic policies. Further, the fuel price rise is providing fiscal relief to oil exporters but is measured enough not to destabilize oil importers.
Confidence resurges in developing Asia:
Ø The short-term growth outlook for developing Asia is heartening.
Ø Inflation remains broadly in check amid firming oil prices.
Ø Developing Asia and the rest of the world enjoy a revival in trade.
Ø Yet the regional current account surplus is set to contract.
Ø Risks to the outlook become more balanced, upside and down.
Outlook by subregion
Ø The outlook is improving for most economies in developing Asia: Better prospects for Central Asia, East Asia, and Southeast Asia more than offset the downward revision in the growth outlook for South Asia, while the Pacific remains largely on track to meet projections.
Ø East Asia benefits from a rebound in global trade.
Ø South Asia’s economic recovery is delayed until 2018.
Ø Southeast Asia is poised to surpass earlier growth forecasts.
Ø Central Asia sees growth boosted by better prospects in Kazakhstan.
Ø Pacific growth forecasts are on track despite mixed prospects.
Outlook for India
The GDP growth is now expected to dip from 7.1% in 2016 to 7.0% in 2017 due to sluggish consumption and dampened business investment,. Demonetization last year suppressed small businesses and private credit, and adjustment to the new national goods and services tax muted manufacturing growth. However, short term disruption is expected to dissipate, which will allow these initiatives to generate growth dividends over the medium term. Expansion is forecast to accelerate to 7.4% in 2018.
Looking ahead, developing Asia must mobilize $1.7 trillion annually to meet its infrastructure needs. Public–private partnership can help fill the financing gap by allocating risk to the party best able to manage it. The success of the approach depends on governments identifying projects suitable for it, engaging qualified private partners, and instituting the right process.
GDP Growth rate,% per year