The Asian Development Bank (ADB) has pared its 2022-23 growth projection for India’s economy to 7% from 7.5% estimated in April, terming it a “modest downward revision” driven by higher-than-anticipated inflation and monetary tightening.
The Bank also raised its inflation forecast for India to 6.7% for this year, while widening its current account deficit (CAD) estimate to 3.8% of GDP. The CAD is expected to drop to 2.1% of GDP in 2023-24 while inflation will moderate to 5.8% as demand pressures from strengthening economic activity are tamped down by easing supply bottlenecks, the Bank reckoned.
The first quarter growth of 13.5% reflected strong growth in services for India, but GDP growth forecasts were being revised downward as price pressures are expected to adversely impact domestic consumption, and sluggish global demand and elevated oil prices will likely be a drag on net exports, the Bank said. In 2023-24, the ADB expects India to grow 7.2%.
