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ADB lowers India’s 2017 growth forecast to 7%

LiveMint logoLiveMint 26-09-2017 Staff Writer

The Asian Development Bank (ADB) has lowered its 2017 growth forecast for India to 7% from its July estimate of 7.4%, reflecting “short term disruptions” such as last year’s demonetisation and this year’s implementation of the goods and services tax (GST) that the bank expects to “dissipate”.

In a Tuesday update to its Asian Development Outlook 2017, the bank increased its growth forecast for Asia from 5.7% to 5.9% on the back of China’s better-than-expected performance and a revival in global trade and strong growth in the developed world.

It expects the good news to last into 2018, for which it increased the region’s growth forecast to 5.8% from 5.7%. The bank upped its forecast for China to 6.7% in 2017, from the previously estimated 6.5%. It also increased next year’s forecast for China to 6.4% from 6.2%.

Graphic: Prajakta Patil/Mint

In India’s case, ADB expects “medium term benefits” from GST. It expects growth next year to pick up to 7.4%, lower than the previously estimated 7.6%.

On Monday, India announced the revival of the economic advisory council to advise the prime minister on the economy. India’s growth fell to a three-year low of 5.7% in the April-June quarter. Some of the decline was caused by the lingering effects of demonetisation and the implementation of GST (which are expected to ease). Private investment, meanwhile, has shown no signs of recovery.

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