ADB scales down India growth estimate further to 9.7% in FY22

ADB has scaled down India's growth estimate for the fiscal year ending March 2022 due to supply chain issue of industries

The Asian Development Bank for the second time in three months has scaled down India's growth estimate for the fiscal year ending March 2022 due to supply chain issue of industries.

The Manila-based multilateral development bank pegged India's growth estimate at 9.7% for the current fiscal year in its latest supplement. The ADB had projected a growth rate of 10% for FY22 in its September supplement.

In a supplement to the Asian Development Outlook (ADO) 2021, it said South Asia is forecast to grow at 8.6% in 2021, compared with the September's forecast of 8.8%.

"India, South Asia's largest economy, is now expected to grow 9.7% in fiscal year (FY) 2021, which ends 31 March 2022. The reduction of 0.3 percentage points comes amid supply chain issues that are affecting industry. India's outlook for FY2022 is maintained at 7.5%, as domestic demand is expected to normalize," as per the ADB supplement.

In September, it had revised down India's economic growth forecast for the current fiscal to 10%, from 11% predicted earlier, citing the adverse impact of the second wave of the pandemic.

ADB also trimmed its growth forecasts for developing Asia for this year and next to reflect risks and uncertainty brought on by the new Omicron coronavirus variant.

The Manila-based lender now sees 2021 gross domestic product (GDP) growth of 7.0% for developing Asia, down from 7.1%, and 2022 growth of 5.3%, down from 5.4% in September.

"COVID-19 has receded in developing Asia, but rising infections worldwide and the emergence of a fast-spreading variant suggest that the pandemic will take time to play out," the ADB said in a supplement to its Asian Development Outlook report.

Most of developing Asia's subregions are forecast to grow slower than previously thought this year, due in part to a weak recovery in China.

China's economy, which staged an impressive rebound from last year's pandemic slump, has lost momentum in recent months as it grapples with surging prices, a slowing manufacturing sector, debt problems in the property market and persistent COVID-19 outbreaks.

The ADB projects China's economy will grow 8.0% this year, slightly weaker than its 8.1% estimate in September, before it slows to 5.3% in 2022, down from its earlier projection of 5.5%.

The recent emergence of Omicron, which the World Health Organization says has been reported by more than 60 countries since it was first detected last month in southern Africa and Hong Kong, "is a sobering reminder that further outbreaks remain a possibility," the ADB said.