The Asian Development Bank (ADB) revised South Asia’s GDP growth forecast from 7.4 percent to 7.1 percent for 2023 due to a slowdown in economic activities and rising inflation.
ADB said this in its Asian Development Outlook (ADO) 2022 Supplement report titled “Recovery Faces Diverse Challenges”. The report was globally released on Thursday.
The ADO supplement report said South Asia’s economy is expected to expand less than ADO 2022’s projection.
“This mainly reflects a modest downward revision to India’s forecast GDP growth due to higher-than-anticipated inflation since April and monetary tightening, and Sri Lanka’s sharp GDP contraction due to the country’s sovereign debt and balance-of-payment crises,” says ADB.
The growth prospects for the subregion’s other economies are largely unchanged as various positives balance out global headwinds. On balance, the growth forecast for South Asia is revised down from 7.0% to 6.5 percent for 2022 and from 7.4 percent to 7.1 percent for 2023.
India’s GDP growth moderated to 4.1 percent in Q4 of the fiscal year 2021 (FY2021, ended 31 March 2022) on disappointing growth in private consumption and a contraction in manufacturing. India has been hit by the Omicron Covid-19 variant and the economic impact of the war in Ukraine.
Consequently, GDP growth for FY2021 is revised down from 8.9 percent to 8.7 percent and from 7.5 percent to 7.2 percent for FY2022.
Although consumer confidence continues to improve, higher-than-expected inflation will erode consumer purchasing power. Some of the impacts of this may.
Bangladesh:
In Bangladesh, the latest official estimates for FY2022 (ended 30 June 2022) show GDP growth at 7.2 percent surpassing ADO 2022’s 6.9 percent projection. Growth was driven by industry (10.4 percent) and services (6.3 percent) Agriculture output, however, fell to 2.2 percent.
Exports and imports were stronger than expected, reflecting a faster recovery in economic activity and private investment. This recovery is also being supported by rising credit to the private sector.
Inflation projections for Bangladesh remain unchanged in FY2022, but revised up slightly for FY2023 on rising global food and energy prices, including for diesel, kerosene, and natural gas.
