Manila [Philippines], July 18 (ANI): Asian Development Bank on Thursday cut India's gross domestic product (GDP) growth forecast to 7 per cent for the current financial year on the back of fiscal shortfall concerns.
"The growth outlook for India has been cut to 7 per cent in 2019 (FY20) and 7.2 per cent in 2020 (FY21) because the fiscal 2018 outturn fell short," it said in its supplement to the Asian Development Outlook (ADO) 2019.
"Growth is expected to inch up again to 7.2 per cent in FY2020, helped by recent reforms to improve the business climate, strengthen banks and relieve agrarian distress," it added.
The US decision to end preferential trade treatment for India under its Generalised System of Preferences (GSP) will have minimal effect as it benefited only 1.8 per cent of all Indian exports, said ADB. Agriculture is expected to grow at a healthy rate in as current weather trends indicate a normal monsoon.
The economic outlook for South Asia remains robust, said ADB. The growth is projected at 6.6 per cent in 2019 and 6.7 per cent in 2020.
However, deepening trade tension between China and the United States remains the largest downside risk to this outlook, despite an apparent truce in late June that could allow trade negotiations between the two countries to resume.
"Even as the trade conflict continues, the region is set to maintain strong but moderating growth," said ADB Chief Economist Yasuyuki Sawada. "However, until the world's two largest economies reach agreement, uncertainty will continue to weigh on the regional outlook."(ANI)