In April 2025, Manila (the Philippines)-based Asian Development Bank (ADB) released its latest ‘Asian Development Outlook (ADO) April 2025: Trade Uncertainty Challenges Resilience in Asia and the Pacific’. The report has revised India’s Gross Domestic Product (GDP) growth forecast for Financial Year 2025-26 (FY26) to 6.7%, from its previous estimate of 7%.
- This growth projection for FY26 is mainly driven by higher domestic demand, rising rural incomes, and moderating inflation.
- The report has further projected that India’s GDP will marginally increase by 10 basis points (bps) to 6.8% in FY27, supported by favorable monetary and fiscal policies.
India-Specific:
i.The report highlighted that India’s growth remains resilient despite global risks, driven by infrastructure development and job creation initiatives by the Government of India (GoI).
- It has outlined some of the factors that will support India’s economic growth momentum: strengthening of manufacturing sector, regulatory reforms, robust services sector, and agriculture, and along with the newly announced tax incentives in the Union Budget for FY26.
ii.As per the report, India’s inflation rate is projected to decrease in the next two financial years i.e. to 4.3% (FY26) and 4.0% (FY27).
iii.Investment in urban infrastructure is expected to increase, supported by a new government fund with an initial allocation of Rs 100 billion (USD 1.17 billion).
- While global economic uncertainties may obstruct private investment prospects in the short-term, but, they are expected to improve with gradual lowering of borrowing costs and planned regulatory reforms could spur investment over time.
iv.The report highlighted some of near-term growth risks like: the impact of recent increase in the USA tariffs on Indian exports and global economic developments that could possibly lead to higher commodity prices.
Region-wise:
i.As per the report, the economies in the Developing Asia region are expected to grow at 4.9% in 2025, slightly lower than last year’s growth of 5.0%.
- This growth rate is further projected to decrease by 20 bps, to 4.7% in 2026.
ii.ADB has projected the inflation rate for Developing Asia will be at 2.3% and 2.2%, for 2025 and 2026 respectively.
iii.The report has projected stronger growth in the South Asia and South-East Asia region, supported by domestic demand, and a continued recovery in the tourism sector.
- According to a report, the economies in the South Asia region will grow at 6.0% (in 2025) and 6.2% (in 2026).
- While, the growth rate of economies in the South-East Asian region is expected to be at 4.7% for both 2025 and 2026.
About Asian Development Bank(ADB):
President– Masato Kanda (Japan)
Headquarters– Manila, the Philippines
Members Nations- 69 (49 members nations are from Asia-Pacific region)
Established– 1966
