ADB keeps India's GDP growth projection for FY25 unchanged at 7%

On Wednesday, the Asian Development Bank (ADB) maintained its GDP growth forecast for India at 7% for FY25, citing robust expansion in the industrial sector and strong construction demand, particularly driven by housing.

ADB noted that the central government's favorable fiscal position could further bolster growth, although potential risks from weather events and geopolitical tensions need consideration.

ADB's July report highlighted the importance of agriculture in sustaining rural economic growth, with expectations of an above-normal monsoon. It also emphasized strong investment demand supported by public spending, alongside robust bank credit fueling housing demand and improving private investments.

However, ADB pointed out that while services continue to drive export growth, merchandise exports are experiencing relatively slower expansion.

Looking ahead, ADB maintained India's GDP growth projection for FY26 at 7.2%, aligning with its previous outlook in April. The economy expanded by 8.2% in FY24, exceeding the 7% growth recorded in FY23, largely driven by a stronger-than-anticipated 7.8% growth in the fourth quarter, according to provisional estimates from the National Statistical Office.

Meanwhile, the Reserve Bank of India (RBI) has forecasted a 7.2% growth rate for FY25. RBI Governor Shaktikanta Das recently highlighted that India is on the brink of a significant structural transformation in its growth trajectory, aiming to sustain annual GDP growth around 8% over the long term.

ADB also adjusted its growth forecast slightly for developing Asia and the Pacific, raising the projection for 2024 to 5% from a previous estimate of 4.9%, driven by increasing regional exports and resilient domestic demand. The growth outlook for 2025 remains steady at 4.9%.

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