A report by Asian Development Bank (ADB) estimated that India’s gross domestic product (GDP) growth is expected to rebound to 7.2% this year. The bank attributed the GDP growth to higher consumption resulting from the income support provided to farmers. The report also noted that the Southeast Asian region will retain its 5% economic growth on a global level.
The report titled ‘Asian Development Outlook’ was released on Wednesday and it provided estimates about various Asian economies. It stated that India’s growth slowed from 7.2% in the fiscal year 2017 to 7.0% in the fiscal year 2018. The bank cited various reasons like weaker agricultural output, lower government expenditure, lower consumption, and higher oil prices for this decline in GDP growth.
Factors like policy rate cut and income support to farmers can help the boost consumption, and this is likely to contribute to the country’s economic growth in the upcoming quarters. Though the export growth is weak, strengthening demand within the country will help offset this poor export growth. For the fiscal year 2020, the bank has estimated India’s GDP growth to be 7.3%.
Though ADB estimates a rebound in economic growth, it has cut down India’s estimated growth from its December 2018 forecast of 7.6%. The bank cited risks attributable to rising trade tensions and uncertainties surrounding Brexit as the reasons for lowering the estimates. Due to a weaker global environment, export growth is likely to be affected for the fiscal year 2019. However, it is expected to pick up slightly in 2020.
Yasuyuki Sawada, Chief Economist of the Asian Development Bank, stated that domestic demand continues to remain strong in most of the economies in the Southeast Asian region. This is offsetting the weak demand caused by the export slowdown. Other factors like rising income, robust remittances, and low inflation are likely to contribute to the GDP growth of these economies.
Source: Financial Express