ADB retains India's 2024-25 growth forecast at 7%, but here's what it projects for China

“India’s growth prospects remain robust,” said the Asian Development Bank (ADB) on Wednesday as it retained the country’s GDP growth forecast for the current fiscal (2024-25) at 7 per cent and 7.2 per cent for 2025-26.

“GDP growth is expected at 7 per cent in fiscal year 2024 (FY2024, ending 31 March 2025) and 7.2 per cent in FY2025, both as forecast in ADO April 2024,” the ADB said.  

The Manila-based lender also asserted that India’s GDP growth is expected to pick up in the quarters ahead.

What will boost India’s economy?

In its Asian Development Outlook (ADO) September report, ADB said that improved farm output and recent policy announcement offering workers and firms employment-linked incentives would help boost labour demand and increase job creation starting in FY2025, thereby accelerating the Indian economy in the coming quarters.  

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“While GDP growth slowed to 6.7 per cent year on year in the first quarter of FY2024, it is expected to accelerate in the coming quarters with improvement in agriculture and a largely robust outlook for industry and services,” the ADB said.  

It further said that private consumption is expected to improve, driven by rural consumption fuelled by stronger agriculture and by prevailing high urban consumption.

The outlook for private investment is upbeat, but growth in public capital expenditure, heretofore high, will moderate in FY2025, the ADB latest report said.

It further said that the FY2024 inflation forecast has been revised up slightly to accommodate higher food prices and the forecast for FY2025 is maintained in the expectation that core inflation will rise as food inflation moderates.

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The report also said that the exports from India in the current fiscal will be higher than earlier projected, led by larger services exports, particularly in IT and professional services. However, growth in merchandise export growth will be relatively muted through the next fiscal, though a few segments, such as electronics, may witness faster growth.

“Efforts toward fiscal consolidation are expected to drive down the fiscal deficit to a level last seen before COVID-19, reflecting robust revenue collection and restrained current expenditure,” the ADB said.

China GDP forecast

The ADB has kept China’s growth forecast at 4.8 per cent this year, which is below the Xi Jinping-led government’s official target of about 5 per cent. The country’s GDP growth for 2025 is projected at 4.5 per cent.  

China is the world’s second-largest economy after the US, but it has been struggling with deflationary pressures, and has been making all possible efforts to lift growth despite a series of policy measures aimed at spurring domestic spending

The ADB said that lingering weakness in China’s property sector has negatively affected household spending during 2024. This has been partially offset by higher investment, underpinned by stimulatory monetary and fiscal policies, and higher exports, it further said.

ADB growth forecast for Asia

For Asia, the growth forecast for this year has been projected at 5 per cent, compared with a projection of 4.9 per cent in April, the ADO report said.  

The forecast for next year has been retained at 4.9 per cent.  

The report also stated that inflation in developing Asia and the Pacific is expected to ease further to 2.8 per cent in 2024, compared with a previous forecast of 3.2 per cent.

With inputs from agencies.