The Asian Development Bank (ADB) recently released the Asia Development Outlook Report in April 2024 and revised India’s Gross Domestic Product (GDP) growth forecast for the fiscal year (FY) 2024 and FY 2025, citing various factors contributing to this optimistic outlook.
Key Highlights of Asia Development Outlook Report 2024
Asia’s Growth Outlook
- About: Despite uncertain external prospects, Asia is projected to maintain resilient growth in the coming years.
- Factors such as the conclusion of interest rate hiking cycles in most economies and a sustained recovery in goods exports, particularly driven by improving semiconductor demand, contribute to the region’s broadly positive outlook.
- GDP Growth Forecast: Asia’s GDP growth forecast for 2024 stands at 4.9%, with a similar projection maintained for 2025.
- This steady growth trajectory reflects the region’s ability to navigate external challenges and sustain economic momentum.
- Inflation Trends: Inflation in Asia is expected to moderate, with a forecast of 3.2% for 2024 and a further decrease to 3.0% in 2025.
- This trend indicates a relatively stable pricing environment, which can support consumer confidence and spending.
India’s Growth Forecast
- Growth Forecast: India’s investment-driven growth is highlighted as a significant factor in positioning the country as a major economic engine within Asia.
- ADB now projects India’s GDP growth to reach 7% in FY 2024 and 7.2% in FY 2025, up from the previous forecast of 6.7% for FY 2024.
Factors Fueling Growth in FY 2024
- Higher capital expenditure on infrastructure development by central and state governments is a major driver of growth.
- Private corporate investment is expected to rise, supported by stable interest rates and improved consumer confidence.
- The service sector’s performance, including financial, real estate, and professional services, is contributing significantly to economic expansion.
- Growth Momentum in FY 2025: FY 2025 is expected to witness increased momentum, driven by improved goods exports, enhanced manufacturing productivity, and higher agricultural output.
- The forecast reflects a positive outlook for India’s economy, buoyed by its strong domestic demand and supportive policies.
- Risks and Challenges: Despite the positive forecast, unanticipated global shocks like supply disruptions in crude oil markets and weather-related impacts on agriculture remain key risks.
- The current account deficit is projected to widen moderately due to rising imports to meet domestic demand.
- However, according to recent RBI data, the current account deficit (CAD) decreased sequentially from 1.3% of GDP in Quarter 2 FY24 to 1.2% in Quarter 3 FY24.
Asian Development Bank
- About: Established in 1966, ADB is a regional development bank that envisions a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty in the region.
- ADB supports its members and partners through the provision of loans, technical assistance, grants, and equity investments aimed at advancing social and economic development.
- Headquarters: Manila, Philippines
- Members: It currently has 68 members of which 49 are from within Asia and the Pacific and 19 outside.
- ADB and India: India is a founding member of ADB and the bank’s fourth-largest shareholder.
- ADB supports India’s priorities for robust, climate resilient, and inclusive growth, aligned with ADB’s Strategy 2030 and the country partnership strategy, 2023–2027.