ADB projects India’s growth 7.0% in 2016
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| India’s tempered growth projection to 7.0% from the previously forecasted 7.4% in 2016 is due to weak investments, a slowdown in the country’s agriculture sector, and the lack of available cash due to the government’s decision to ban high-denomination banknotes. |
Asian Development Bank (ADB) has
downgraded the forecast in South Asia from 6.9% to 6.6% in 2016. Growth will
bounce back in 2017, reaching 7.3%. India’s tempered growth projection to 7.0%
from the previously forecasted 7.4% in 2016 is due to weak investments, a
slowdown in the country’s agriculture sector, and the lack of available cash
due to the government’s decision to ban high-denomination banknotes. This will
likely affect largely cash-based sectors in the country including small- and
medium-scale businesses. The effects of the transition are expected to be
short-lived and the Indian economy is expected to grow at 7.8% in 2017.
The forecast in East Asia is
maintained for 2016 and 2017. Growth this year will reach 5.8%, with a slight
moderation to 5.6% in 2017. Growth in the People’s Republic of China (PRC) -
the world’s second largest economy — is expected to hit 6.6% this year, driven
by strong domestic consumption, solid wage growth, urban job creation, and
public infrastructure investment. The forecast for the PRC in 2017 is
maintained at 6.4%.
In Southeast Asia, growth forecasts
remain unchanged at 4.5% in 2016 and 4.6% in 2017, with Malaysia and the Philippines
expecting stronger growth due to a surge in domestic consumption and public and
private investment, compared to lower growth forecasts in Brunei Darussalam,
Myanmar, and Singapore.
The outlook in Central Asia is
maintained at 1.5% in 2016 and 2.6% in 2017, as the ongoing recession in the
Russian Federation and low global commodity prices for oil and natural gas
continue to dampen growth in the sub region.
The Pacific will see growth of 2.7% in
2016, picking up to 3.3% in 2017. The fiscal contraction in Papua New Guinea —
the Pacific’s largest economy — and recovery from recent cyclones have weighed
on growth in the sub region. While cyclone damage in Fiji has had a bigger
impact on its growth outlook than previously envisaged, prospects for Samoa,
Kiribati, and Tuvalu are improving through improvements in fisheries,
infrastructure, and tourism.
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