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Asian Development Bank upgrades its forecast

Asian Development Bank upgrades its forecast for the Indian economy

By Ashish Mitra --
Monday, 14 Dec, 2020

On the back of faster than expected recovery, the Asian Development Bank (ADB) has upgraded its forecast for the Indian economy, projecting 8 per cent contraction in 2020-21 as compared to 9 per cent de-growth estimated earlier.

Observing that the economy has begun to normalise, the Asian Development Outlook (ADO) Supplement revealed the second quarter contraction at 7.5 per cent was better than expected. The economy contracted by 23.9 per cent in June quarter of the current fiscal on account of the impact of the Coronavirus pandemic.

“The GDP forecast for FY2020 is upgraded from 9.0 per cent contraction to 8.0 per cent, with GDP in H2 probably restored to its size a year earlier. The growth projection for FY2021 is kept at 8.0 per cent,” it said. Highlighting that the recovery in India is going on a rapid pace, the report said that the earlier South Asia forecast of 6.8 per cent contraction is upgraded to (-)6.1 per cent in line with an improved projection for India. Growth will return in 2021-22, at 7.2 per cent in South Asia and 8 per cent in India, it added.

Earlier this month, Reserve Bank Governor Shaktikanta Das had said that the economy was recuperating faster than anticipated and the growth rate is likely to turn positive in the second half of the current financial year. In the year as whole, the economy is likely to contract by 7.5 per cent which is an improvement over Reserve Bank’s previous projection of 9.5 per cent contraction, Das had said while unveiling the bi-monthly monetary policy review.

Observing that the prospects of growth have brightened with the progress on the vaccine front, Das said that the economy was likely to record a growth of 0.1 per cent in Q3 and 0.7 per cent in Q4. With regard to inflation, ADO said that it is expected to ease in the coming months and the 4 per cent update projection for 2021-22 has been maintained.

In India, supply chain disruption brought food inflation to an average of 9.1 per cent in the first 7 months of 2020-21, pushing headline inflation to 6.9 per cent in the same period, it said. As a result, ADO revised India’s inflation from 4.5 per cent to 5.8 per cent for the current fiscal.

Asian Development Bank upgrades its forecast for the Indian economy. On the back of faster than expected recovery, the Asian Development Bank (ADB) has upgraded its forecast for the Indian economy, projecting 8 per cent contraction in 2020-21 as compared to 9 per cent de-growth estimated earlier.

Observing that the economy has begun to normalise, the Asian Development Outlook (ADO) Supplement revealed the second quarter contraction at 7.5 per cent was better than expected. The economy contracted by 23.9 per cent in June quarter of the current fiscal on account of the impact of the Coronavirus pandemic.

“The GDP forecast for FY2020 is upgraded from 9.0 per cent contraction to 8.0 per cent, with GDP in H2 probably restored to its size a year earlier. The growth projection for FY2021 is kept at 8.0 per cent,” it said. Highlighting that the recovery in India  is going on a rapid pace, the report said that the earlier South Asia forecast of 6.8 per cent contraction is upgraded to (-)6.1 per cent in line with an improved projection for India. Growth will return in 2021-22, at 7.2 per cent in South Asia and 8 per cent in India, it added.

Earlier this month, Reserve Bank Governor Shaktikanta Das had said that the economy was recuperating faster than anticipated and the growth rate is likely to turn positive in the second half of the current financial year. In the year as whole, the economy is likely to contract by 7.5 per cent which is an improvement over Reserve Bank’s previous projection of 9.5 per cent contraction, Das had said while unveiling the bi-monthly monetary policy review.

Observing that the prospects of growth have brightened with the progress on the vaccine front, Das said that the economy was likely to record a growth of 0.1 per cent in Q3 and 0.7 per cent in Q4. With regard to inflation, ADO said that it is expected to ease in the coming months and the 4 per cent update projection for 2021-22 has been maintained.

In India, supply chain disruption brought food inflation to an average of 9.1 per cent in the first 7 months of 2020-21, pushing headline inflation to 6.9 per cent in the same period, it said. As a result, ADO revised India’s inflation from 4.5 per cent to 5.8 per cent for the current fiscal.