ADB cuts India growth forecast to 5.8 percent

The Asian Development Bank (ADB) Tuesday lowered India's growth forecast for 2013 to 5.8 percent from its earlier projection of 6 percent announced in April.

In its Asian Development Outlook supplement for 2013, the ADB said weak industrial activities and sluggish reforms would affect economic growth in India.

"In India, slowing fixed capital formation, weak industrial activity, and plodding progress on reform are weighing on the economy, now forecast to expand by 5.8 percent in 2013," the Manila-headquartered development bank said in the report.

The ADB has lowered average growth forecast for its 45 developing member countries to 6.3 percent from 6.6 percent pegged in its April projection, largely due to weaker growth in China and India.

China's growth is expected to drop 7.7 percent in 2013 and it may decline further to 7.5 percent in 2014.

"The drop in trade and scaling back of investment are part of a more balanced growth path for China, and the knock-on effect of its slower pace is definitely a concern for the region. But we are also seeing more subdued activity across much of developing Asia," ADB chief economist Changyong Rhee said in the report.

The report has also trimmed forecasts for Central Asia, reflecting the sluggish economic performance of Kazakhstan and Georgia, and for the Pacific where Timor-Leste is seeing a slowdown in government spending.

With softer oil prices and relatively stable food prices, inflation in developing Asia is now forecast to dip to 3.5 percent in 2013, the report said.