The Asian Development Bank raised India’s growth forecast for the current year to 7%, from 6.7% earlier, citing strengthening investment and improving consumption demand in the country, and pegged next year’s expansion at 7.2%. It also estimated inflation to stay around 4.6% in 2024.
ADB had projected the Indian economy to grow 7.6% last year. “The economic outlook for India depends on price and financial market stability, which are crucial for consumer and business confidence. The outlook could thus be affected by negative global shocks, such as a supply shock in crude oil markets that spikes energy costs and raises global inflation, which could lead central banks to tighten financial conditions globally and in India,” the agency said in its latest outlook.
While weather shocks could impact demand and inflation, due to under-performance in agriculture, ADB said there could be an upside due to faster-than-expected FDI inflow, particularly into manufacturing, where several companies have announced projects. “Besides boosting output, FDI inflow would improve productivity. Better than-expected global growth could boost exports and thus growth,” it added.
