The Asian Development Bank (ADB) has revised India’s economic growth forecast for the current financial year to 6.5 per cent, down from its earlier estimate of 7 per cent, Economic Times reported.

This adjustment reflects lower-than-expected growth in private investment and housing demand, according to the latest edition of the Asian Development Outlook (ADO). The forecast for FY26 has also been lowered to 7 per cent from the previously projected 7.2 per cent.

“India’s outlook is adjusted downward from 7 per cent to 6.5 per cent for this year, and from 7.2 per cent to 7 per cent next year, due to lower-than-expected growth in private investment and housing demand,” the ADB report stated.

The downward revision aligns with the Reserve Bank of India’s (RBI) recent projection, which scaled back India’s GDP growth forecast for FY25 to 6.6 per cent, down from 7.2 per cent.

RBI also raised the inflation estimate to 4.8 per cent due to a slowdown in economic activity and persistently high food prices. India’s GDP growth for the July-September quarter of FY24 stood at a seven-quarter low of 5.4 per cent, falling short of the RBI’s projection of 7 per cent.

Despite these adjustments, the ADB emphasised that India’s growth will remain robust, supported by factors such as higher agricultural output from the kharif season, resilience in the services sector, and lower-than-expected Brent crude prices in 2024 and 2025.

The report also pointed to positive forward-looking indicators, including PMI data for industry and services, urban labour force participation, and RBI’s industrial outlook, which suggest economic momentum will recover in upcoming quarters.

On a broader scale, the ADB noted that Asia and the Pacific’s economies are projected to grow 4.9 per cent in 2024, a slight decline from the September forecast of 5 per cent.

Southeast Asia’s growth forecast has been revised upward to 4.7 per cent, driven by stronger manufacturing exports and public capital spending, while China’s growth forecast remains unchanged at 4.8 per cent this year and 4.5 per cent next year.

The report warned that potential changes in US trade, fiscal, and immigration policies could pose risks to growth and inflation in developing Asia and the Pacific, potentially affecting the region’s long-term economic outlook.