The Asian Development Bank (ADB) has downgraded India’s GDP growth projection to 7 per cent in fiscal 2017-18, a 0.4 percentage point drop from its April forecast. In its Asian Development Outlook 2017 update posted on its website, the multilateral lender also lowered its forecast for India for the next fiscal to 7.4 per cent from the earlier 7.6 per cent.

However, demonetisation and implementation of the new goods and services tax (GST) regime have dented consumer spending and business investment. These short-term disruptions, ADB stated, are expected to dissipate allowing these initiatives to generate growth dividends over the medium term.

The latest ADB report remains optimistic for much of the developing Asia in growth metrics as a result of broad-based recovery in global trade, robust expansion in major industrial economies and improved prospects of China.

“Countries in developing Asia should take advantage of favourable short-term economic prospects to implement productivity-enhancing reforms, invest in badly needed infrastructure, and maintain sound macroeconomic management to help increase their long-term growth potential,” said ADB chief economist Yasuyuki Sawada.

Loose US fiscal policy and lower oil prices are potential upside risks to the region while downside ones include tighter global liquidity, economic disruption from a geopolitical event, or a weather-related disaster. (DS)

Fibre2Fashion News Desk – India

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