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South Asian economic outlook remains strong
08
Dec '15
The economic outlook for South Asia remains strong, according to the Asian Development Bank's Asian Development Outlook 2015 Update. The region's growth is on track to meet Update projections of 6.9 per cent in 2015 and 7.3 per cent in 2016.

India is on track to reach the Update forecast of 7.4 per cent growth in FY2015 (ending 31 March 2016), as growth picked up to 7.4 per cent in the second quarter from 7 per cent in the first. Industrial production accelerated to 4.6 per cent in the second quarter from 3.3 per cent in the first. Growth in public capital expenditure also continued to be robust at about 30 per cent in the second quarter. Leading indicators such as sales of commercial vehicles, car sales, and air passenger traffic were also gathering momentum.

However, continued weakness in external demand will likely cause exports to contract this year. India's economy faces further downside risks from sluggish private investment and rural demand weakened by slow wage growth and muted increases in support prices for agricultural products.

According to the Update, continued strong economic expansion in India balances a slowdown in Bhutan and the Maldives in 2015, and in Nepal in 2016. The downward revision for Bhutan reflects hydroelectric sales below expectations and for the Maldives a weaker tourism outlook.

In Pakistan, provisional GDP growth in FY2015 (ended 30 June 2015) is as forecast in the Update. The economic slowdown forecast for Nepal in 2016 reflects lower expectations for the summer crop harvest following unfavorable weather and unforeseen delays in earthquake-related reconstruction.

Growth projections for Bangladesh and Sri Lanka remain in line with those in the Update. Strong domestic demand on the back of an expected pickup in investment and improved garment exports will continue to support growth in Bangladesh, while the alleviation of political uncertainty in Sri Lanka is seen to revive private investment. (SH)

Fibre2Fashion News Desk - India

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