On December 11 2024, Manila (The Philippines)-based multilateral bank, Asian Development Bank (ADB) released its latest “Asian Development Outlook (ADO) December 2024: Steady Growth Amid a Shifting Global Policy Landscape”. It has lowered India’s Gross Domestic Product (GDP) growth projection for Financial Year 2024-25 (FY25) by 50 basis points (bps), to 6.5% from its previous estimate of 7%.
- This downward projection for FY25 is due to India’s lower-than-expected growth in 2nd Quarter (Q2: July-September) of FY25, driven by dampened manufacturing performance and slow government spending.
India-Specific:
i.The report has also revised India’s GDP forecast for FY26 down to 7% from 7.2% (estimated in its September edition of ADO), which is mainly attributed by the lower than expected growth in private investment and housing demand due to tight monetary policy which aimed to combat inflation.
ii.The report highlighted that Indian economy decreased to 7-quarter low to 5.4% in Q2FY25 compared to 6.7% and 8.2% in Q1FY25 and Q1FY24, respectively.
- It has outlined that this slow growth in Q2FY25 was attributed by the slow industrial growth at 3.6% Year-on-Year (Y-o-Y), while the agriculture and services sectors have registered the strong growth i.e. at 3.5% and 7.1%, respectively.
v.The report has retained India’s inflation forecast for FY25 at 4.7%. But, it has decreased India’s inflation projection for FY26 to 4.3% (from 4.5%) due to the expected decrease in the prices of Brent crude which will lead to lower energy inflation.
Global Scenario:
i.As per the report, Developing Asia region is expected to grow at 4.9% in 2024 and 4.8% in 2025, slightly lower than from ADB’s previous estimate of 5.0% and 4.9% in 2024 and 2025, respectively.
Note: The Developing Asia region comprises 46 Asia-Pacific countries stretching from Georgia to Samoa, except: Japan, Australia and New Zealand.
ii.ADB has decreased its inflation projection for Developing Asia for 2024 and 2025 to 2.7% and 2.6%, respectively, from its earlier estimates of 2.8% and 2.9%, due to decreasing global commodity prices.
- It has also estimated that economies in Asia-Pacific region will grow at 4.9% in 2024, compared to its previous estimate of 5%.
iii.The report has lowered its GDP forecast for South Asia region to 5.9% for 2024 and 6.3% for 2025, due to weaker domestic demand prospects.
Note: In November 2024, Masato Kanda (Japan) has been unanimously elected as 11th President of ADB. He will officially assume office on 24th February 2025.
About Asian Development Bank(ADB):
President– Masatsugu Asakawa(Japan)
Headquarters– Mandaluyong City, Manila, The Philippines
Members Nations- 69 (49 members nations are from Asia-Pacific region)
Established– 1966
