ADB forecasts India’s growth at 7.4% in FY17

Manila, September 27

The Asian Development Bank (ADB) kept its growth estimates for developing Asia for this year and next at 5.7%, saying sustained expansion in China and India can steady the region but warned of risks from a looming US interest rate hike.

The Manila-based lender increased its growth forecast this year for China to 6.6% from 6.5% and for 2017 to 6.4% from 6.3%, citing fiscal and monetary stimulus measures in the world’s second-largest economy.

The projections for India were kept at 7.4% for this year and 7.8% for 2017, driven by strong consumption and an investment revival, the ADB said in an update on Tuesday of its Asian Development Outlook released in March.

“Strong growth in China and India is helping the region maintain its growth momentum,” said Juzhong Zhuang, ADB deputy chief economist. “Still, policymakers need to watch for downside risks, including potential capital reversals that could be triggered by monetary policy changes in advanced economies, especially the US,” said Zhuang.

The possibility of a US interest rate hike could disrupt capital flows and complicate macroeconomic management in the region, the bank said.

“Private debt is on the rise in many Asian economies, which could become unsustainable if economies struggle or interest rates rise sharply,” ADB said. Reuters