Ahead of China, India to remain fastest growing economy in FY19 and FY20: ADB
NEW DELHI: India will continue to be the world’s fastest-growing major economy, ahead of China, with 7.3 percent growth rate in 2018-19 and 7.6 percent in 2019-20, the Asian Development Bank (ADB) said today. The growth in India will be driven by increased public spending, higher capacity utilisation rate and uptick in private investment, said its supplement to the Asian Development Outlook (ADO). While retaining India’s growth rate for current fiscal and the next, ADO said economic growth in China will decelerate to 6.6 percent in 2018 and further to 6.4 percent in 2019. China’s growth rate was 6.9 percent in 2017. On India, it said: “In sum, the GDP growth forecast for FY2018 (ending March 2019) is maintained at 7.3 percent. Growth in FY2019 is expected to rise to 7.6 percent as measures are taken to strengthen the banking system bolster private investment and as benefits kick in from the goods and services tax. Any further increase in oil prices poses a downside risk to growth.” ADB said India is the dominant economy in the South Asia sub-region with its growth gaining momentum at 7.7 percent in the last quarter ended March of 2017-18, the highest rate of growth since the first quarter of 2016-17. This pushed full-year growth to 6.7 percent (2017-18), a tad higher than estimated in ADO 2018, largely driven by government spending for both consumption and public administration. “In the first half of 2018-19, the growth rate is expected to benefit from a low base. Other key drivers of growth include an uptick in public consumption, which is typical before elections, and a recovery in exports following shortages of working capital related to a new goods and services tax,” said the ADO supplement. In India, the private consumption is expected to grow at a healthy rate as disruption caused by demonetisation in 2016 fades. Capacity utilisation rates are at their highest in 4 years and should provide incentives to firms to invest. Growth in Asia and the Pacific’s developing economies for 2018 and 2019 will remain solid as it continues apace across the region, despite rising tensions between the US and its trading partners. “South Asia, meanwhile, continues to be the fastest growing sub-region, led by India, whose economy is on track to meet the fiscal year 2018 projected growth of 7.3 percent and further accelerating to 7.6 percent in 2019, as measures taken to strengthen the banking system and tax reform boost investment,” it said further. Developing Asia is largely on track to meet growth expectations as set out in April in Asian Development Outlook 2018 (ADO 2018), said the report. The regional gross domestic product (GDP) is forecast to expand by 6 percent in 2018 and 5.9 percent in 2019, the rate envisaged in April, ADO supplement said.