Demontisation effect ended as (ADB) predicts Indian growth at 7.4%
Asian Development Bank today retained India’s growth projection at 7(point)4 per cent for the current financial year even as it raised the forecast for developing Asian region to 5(point)9 per cent.
In a supplement to its Asian Development Outlook (ADO) 2017 report, ADB revised the forecast for developing Asia from 5.7 per cent earlier. For 2018, it was raised from 5.7 per cent to 5.8 per cent. For India, it maintained the growth forecasts at 7.4 per cent for 2017-18 and 7.6 per cent for fiscal 2018-19.
Implementation of the Goods and Services Tax (GST) is expected to improve ease of doing business and facilitate growth in the medium term, it said, adding that there could be some teething pains as firms will take time to adjust to the new indirect tax regime.
There was a slowdown in last fiscal due to demonetisation and factors like sluggish private sector investment and weak bank lending contributed to the slowdown, ADB said.
However, there are signs of manufacturing activity picking up in the current fiscal with June quarter purchasing managers index improving to 51.7 from 51.2 in the preceding quarter of last fiscal, the report said.
According to the report, South Asia will be the fastest growing of all sub-regions in Asia and the Pacific, with growth on track to meet original projections of 7% in 2017 and 7.2% in 2018.
The growth prospects in developing Asia for 2017 have improved on the back of stronger than expected export demand in the first quarter of this year, it said.
In the supplement, ADB has upgraded its growth outlook in the Asian region to 5.9% in 2017 from 5.7% and to 5.8% for 2018 from 5.7%.
The smaller uptick for the next year reflects a cautious view on this sustainability of this export push, it added. “Developing Asia is off to a good start this year with improved exports pushing growth prospects for the rest of 2017,” said Yasuyuki Sawada, ADB’s chief economist.