ADB retains India’s FY25 growth forecast at 7% 

The Asian Development Bank (ADB) has maintained India’s GDP growth forecast at 7% for the current fiscal, citing robust growth in the industrial sector and a rebound in agriculture. 

The Indian economy is on track to grow by 7% in FY25 (ending 31 March 2025) and 7.2% in FY26, the ADB said in the latest edition of Asian Development Outlook (ADO). The forecast is in line with the projections in ADO of April.

“Services continued to expand robustly in Q4 of FY23, and the forward-looking services PMI is well above its long-term average. Industry is also expected to grow robustly, driven by manufacturing and strong demand for construction led by housing. After muted growth in FY23, a rebound in agriculture is expected given the above-normal monsoon projections,” the report said. 

“Bank credit is fueling robust housing demand and improving private investment demand. However, export growth will continue to be led by services, with merchandise exports showing relatively weaker growth. The stronger-than-expected fiscal position of the central government could provide a further boost to growth. However, this must be weighed against downside risks arising from weather events and geopolitical shocks,” the report added. 

The ADB forecast comes after the International Monetary Fund (IMF) revised upward its GDP growth projections for India in the current fiscal to 7% from its earlier projection of 6.8%. 

The bank also raised its economic growth forecast for developing Asia and the Pacific this year to 5.0% from a previous projection of 4.9%, as rising regional exports complement resilient domestic demand. 

The growth outlook for next year is maintained at 4.9%. 

Inflation is forecast to slow to 2.9% this year amid easing global food prices and the lingering effects of higher interest rates.

“After a post-pandemic recovery that was driven mainly by domestic demand, exports are rebounding and helping propel the region’s economic growth. Strong global demand for electronics, particularly semiconductors used for high-technology and artificial intelligence applications, is boosting exports from several Asian economies,” the report said. 

“Most of Asia and the Pacific is seeing faster economic growth compared with the second half of last year,” said ADB chief economist Albert Park. “The region’s fundamentals remain strong, but policymakers still need to pay attention to a number of risks that could affect the outlook, from uncertainty related to election outcomes in major economies to interest rate decisions and geopolitical tensions.”