ADB slashes India’s GDP growth forecast to 7%

PTI

New Delhi, September 21

The Asian Development Bank (ADB) on Wednesday slashed India’s GDP growth forecast for FY23 to 7% from the earlier estimate of 7.2% mainly on account of higher inflation and a tight monetary policy.

Asian Development Outlook Report

• In April, the ADB had projected the Indian economy to grow at 7.5% in FY23 and 8% in FY24
• In July, however, it trimmed the forecast for FY23 to 7.2% and for FY24 to 7.8% citing higher-than anticipated inflation and monetary tightening by RBI
• Rising global oil and commodity prices and supply constraints following the Russian invasion of Ukraine have stoked inflation, said the report

India’s economy grew 13.5% year-on-year in the first quarter of 2022-23, reflecting strong growth in services, ADB said in its second supplement to Asian Development Outlook Report 2022 (ADO 2022).

“However, GDP growth is revised down from ADO 2022’s forecasts to 7% for FY2022 (ending March 2023) and 7.2% for FY2023 (ending March 2024) as price pressures are expected to adversely impact domestic consumption, and sluggish global demand and elevated oil prices will likely be a drag on net exports,” ADB said.

ADB releases the flagship ADO report in April every year. It had then projected the Indian economy to grow at 7.5% in FY23 and 8% in FY24.

In the first supplement to ADO 2022 in July, it however trimmed the growth forecast for FY23 to 7.2% and for FY24 to 7.8% citing higher-than anticipated inflation since April and monetary tightening by RBI due to fallout of the economic impact of the war in Ukraine, among others.

Rising global oil and commodity prices and supply constraints following the Russian invasion of Ukraine have stoked inflation, said the report, adding that domestic factors, such as heatwaves and heavy rainfall, are having a major impact on inflation.

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