ADB Raises India’s GDP Growth Forecast for FY25 to 7% on Strong Investment and Consumer Demand

The Asian Development Bank (ADB) has revised India’s GDP growth forecast for the current fiscal year to 7% from the previous estimate of 6.7%. This upward revision is attributed to the robust growth expected to be driven by both public and private sector investment demand, along with a gradual improvement in consumer demand.

The forecast for 2024-25 aligns with the Reserve Bank of India’s (RBI) projection of 7% GDP growth for the same period. Factors contributing to this optimistic outlook include expectations of a normal monsoon and the continued stability of the manufacturing and services sectors.

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While the projected growth for 2024-25 is slightly lower than the 7.6% recorded in the 2022-23 fiscal year, the ADB highlights the significant role played by strong investment in driving GDP growth during that period, despite muted consumption.

In its April edition of the Asian Development Outlook, the ADB emphasized the robust momentum witnessed in manufacturing and services sectors in the previous fiscal year, which is expected to continue driving growth. It also anticipates a downward trend in inflation in line with global patterns.

Looking ahead, the ADB projects India’s growth for the 2025-26 fiscal year at 7.2%. While exports may see a relative slowdown in the current fiscal due to weakened growth in major advanced economies, there is expected improvement in FY2025.

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The ADB anticipates supportive monetary policy measures to sustain growth as inflation eases, alongside fiscal policies aimed at consolidation while maintaining capital investment support. Despite a projected moderation to 7% growth in FY2024, growth is expected to rebound to 7.2% in FY2025.

To enhance exports in the medium term, the ADB emphasizes the need for India to deepen its integration into global value chains.

Overall, the ADB’s growth forecast for FY25 aligns closely with the RBI’s projections, which also anticipate 7% GDP growth for the current fiscal year, supported by factors such as normal monsoon conditions, moderating inflation, and continued momentum in manufacturing and services sectors.

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