After IMF and Moody's, ADB raises India GDP growth forecast for 2024-25

After the International Monetary Fund (IMF), World Bank and Moody’s, the Asian Development Bank (ADB) has raised India’s GDP growth forecast for 2024-25 to 7 per cent from 6.7 per cent projected in December last year.

The ADB’s gross domestic product (GDP) growth estimate for 2024-25 is however lower than 7.6 per cent projected for the 2022-23 fiscal.

The ADB’s growth forecast for FY25 is in line with the projections made by the Reserve Bank of India (RBI). The India’s central bank last week projected the country’s GDP growth in the current fiscal at 7 per cent on expectations of normal monsoon, moderating inflationary pressures and sustained momentum in manufacturing and services sectors.

Why ABD has increased India’s GDP growth forecast?

Giving out the reason for raising India’s GDP growth for the current fiscal, ADB said the Indian economy will get fillip from the robust growth which will be driven by public and private sector investment demand and gradual improvement in consumer demand.

ADB further said the India’s growth will be robust despite moderating in FY2024 and FY2025, adding, “The economy grew robustly in fiscal 2023 with strong momentum in manufacturing and services. It will continue to grow rapidly over the forecast horizon."

“Growth will be driven primarily by robust investment demand and improving consumption demand. Inflation will continue its downward trend in tandem with global trends,” the ADB added.

For the 2025-26 fiscal, the ADB has projected India’s growth at 7.2 per cent.

ABD on India’s monetary policy

“Monetary policy is expected to remain supportive of growth as inflation abates, while fiscal policy aims for consolidation but retains support for capital investment. On balance, growth is forecast to slow to seven per cent in FY2024 but improve to 7.2 per cent in FY2025,” ADB said.

ABD on India’s export

The ADB said this fiscal, exports from India are likely to be relatively muted as growth in major advanced economies slows down but will improve in FY2025.

To boost exports in the medium term, India needs greater integration into global value chains, it added.

The forecast from ADB within months after IMF raised India’s growth projection for 2024-25 (FY25) by 20 basis points (bps) to 6.5 per cent.

In March, global rating agency Fitch Ratings raised India’s growth forecast for FY25 to 7 per cent from 6.5 per cent estimated earlier.

Earlier in April, World Bank raised its GDP growth forecast for India by 20 basis points to 6.6 per cent in FY25.

Another global rating agency Moody’s has last month raised India’s growth forecast for 2024 calendar year to 6.8 per cent from 6.1 per cent estimated earlier.

With inputs from agencies

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