ADB lowers India’s growth forecast for 2015-16 to 7.4%

The downward revision of India’s GDP to 7.4 per cent from 7.8 per cent in 2015-16, by the Asian Development Bank, seems somewhat hasty compared to the positives it enumerates. Growth is forecast to slow from 7.3 per cent in 2014 to 6.8 per cent in 2015.

In addition, widespread drought, which has created losses to coffee and rice production, will exacerbate damages to the agricultural sector and push up food price in 2016.

China’s has been hit with a stock market crisis and weak exports this year and its growth is now expected at 6.8% for 2015, down from an earlier projection of 7.2%. For FY2017 growth is now seen at 7.8% below the earlier forecast of 8.2%, it said.

ADB noted that subdued economic growth in the major industrial economies and China weakened export demand. For China to cut its emissions as planned, the country would have to slow its economic growth to about 4.5 percent annually, the report found. It is hitting back at the government, which behaved in the same cussed manner when it was in the Opposition. Last year, GDP expanded by 6.1 percent.

The move comes after the economy registered slower annualized growth figures during the first two quarters of the year. “We assess that economic expansion will continue and will accelerate on the second half of the year”, ADB Country director Richard Bolt said in a briefing.

“There are considerable headwinds to growth in Asia although it remains the largest source of global growth”.

“Emerging markets are facing receding capital flows and depreciating currencies-a trend that may be exacerbated by the upcoming rise in U.S. interest rates”, the ADB report stated.

In detail, the bank suggests governments implement macro-prudential policies and develop local currency bond markets.

“The government has taken measures to improve budget execution, which include efforts to simplify land acquisition procedures and advancing the tendering process for the procurement of most public projects under the 2016 budget to expedite implementation”, it says. For 2016, growth projection of 6.3 percent was retained.

Private investment and household consumption should continue to grow given low inflation and employment and remittances remaining solid, the ADB report stated, with services such as BPOs, tourism and retail leading the way.