The Asian Development Bank on Wednesday downgraded its projection for India’s economic growth in the ongoing financial year from 6.5% to 5.1%. It said consumption was impacted due to slow job growth and that the rural sector was in distress due to aggravated poor harvest, PTI reported.
“India’s growth is now seen at a slower 5.1% in fiscal year 2019 as the foundering of a major non-banking financial company in 2018 led to a rise in risk aversion in the financial sector and a credit crunch,” the statement read. “Growth should pick up to 6.5% in fiscal year 2020 with supportive policies.”
In September, the bank had projected that India’s Gross Domestic Product would grow at 6.5% in 2019 and 7.2% in 2020.
The revised forecast came after the country reported that its Gross Domestic Product had contracted to 4.5% in the July-September quarter – the slowest growth rate in more than six years, and the sixth straight quarter of slowdown. The growth rate in April-June was 5%. Core sectors such as automobiles and manufacturing have also slowed down gradually due to weakened consumer demand and dearth of investments.
“In Southeast Asia, many countries are seeing continued export declines and weaker investment, and growth forecasts have been downgraded for Singapore and Thailand,” the statement said. “GDP growth is expected to slow in the Pacific with activity in Fiji, the subregion’s second largest economy after Papua New Guinea, expected to be more subdued than previously anticipated.”
The bank said that Central Asia was the only subregion where the economic situation looked a bit better now than in September.
India’s economic slowdown has been predicted by most agencies and world bodies. Two weeks ago, American credit rating agency Fitch Ratings’ company India Ratings and Research revised its growth forecast for India in the 2019-’20 financial year to 5.6%. In October, the International Monetary Fund had lowered India’s projected growth in the current financial year to 6.1% but said it would rebound to 7% in the 2020-’21 financial year. The United Nations Conference on Trade and Development, in its September report, said the country’s economic growth was expected to slow down to just 6% in 2019 from 7.4% the previous year.
In August, credit rating agency Moody’s Investors Service had downgraded the country’s projected GDP growth rate to 6.2% for 2019-’20. In May, the government had released a report by the National Sample Survey Organisation that showed that India’s unemployment rate rose to a 45-year high of 6.1% in 2017-’18. Another survey showed that the monthly per capita consumption expenditure has declined for the first time in 2017-’18 since the 1970s.