ADB Said That The Forward-Looking Services Purchasing Managers' Index Is Well Above Its Long-Term Average.
On Wednesday, the Asian Development Bank (ADB Said That The Forward-Looking Services Purchasing Managers' Index Is Well Above Its Long-Term Average.) maintained its projection for India's GDP growth at 7% for the fiscal year 2025. This stability is attributed to strong growth in the industrial sector and robust demand in the construction industry, particularly housing.
"The central government's better-than-expected fiscal position could further boost growth," said the ADB. "However, this is balanced by potential risks from weather events and geopolitical shocks."
In its July outlook, ADB highlighted the importance of India’s agriculture sector, which is expected to thrive with forecasts of an above-normal monsoon. This will be crucial for sustaining economic growth in rural areas. Public investment continues to drive strong investment demand.
“Bank credit is driving high housing demand and enhancing private investment demand. However, while export growth will be led by services, merchandise exports will see relatively weaker growth,” noted the ADB. It also pointed out that the forward-looking services purchasing managers' index is significantly above its long-term average.
The International Monetary Fund (IMF) also increased its GDP growth projection for India for FY25 by 20 basis points to 7% in its latest World Economic Outlook update. This adjustment reflects a boost in private consumption, particularly in rural areas.
For FY26, the ADB has kept its GDP growth projection for India at 7.2%, as stated in its April outlook.
India's GDP grew by 8.2% in FY24, up from 7% in FY23, thanks to a stronger-than-expected growth rate of 7.8% in the fourth quarter, according to provisional estimates from the National Statistical Office.
The Reserve Bank of India (RBI) has projected a 7.2% growth rate for the economy in FY25. Last month, RBI Governor Shaktikanta Das stated that India is on the verge of a "major structural shift" in its growth trajectory, moving towards a path where an annual GDP growth of 8% can be sustained for a long period.