India's economy will contract at slower pace of 8%: ADBLast updated on Dec 10, 2020, 08:10 pm
The Indian economy will contract at a slower pace in FY21, the Asian Development Bank (ADB) predicted on Thursday. Revising India's growth for the aforementioned period, the bank said the economy will contract by 8%, a minimal improvement from the earlier de-growth estimate of 9%.
In the June quarter, the economy had contracted by 23.9%, due to the coronavirus pandemic.
Coronavirus pandemic spelled doom for economies
Economies around the world were battered by coronavirus pandemic, whose origins have been traced to China. The raging health crisis has taken 1,577,797 lives worldwide and infected 69,335,250.
ADB Chief Economist Yasuyuki Sawada underscored its impact would still derail growth.
But he added that some countries are recovering faster. "Growth projections have been upgraded for China and India, the region's two largest economies," he said.
Contraction in the second quarter was better than expected
About India, the Asian Development Outlook Supplement noted the contraction in the second quarter was better than expected — at 7.5%.
"The GDP forecast for FY2020 is upgraded from 9.0% contraction to 8.0%, with GDP in H2 probably restored to its size a year earlier. The growth projection for FY2021 is kept at 8%," the bank said.
These predictions are similar to RBI's forecast.
RBI also said economy will perform better in near future
Last week, RBI's Governor Shaktikanta Das revised the real GDP growth projection for 2020-21 to -7.5%, after initially predicting it at -9.5%.
About the revival of the economy, Das had said, "The recovery in rural demand is expected to strengthen further while urban demand is also gaining momentum. India's time has come to break free of the fetters of COVID-19 and reconfigure our destiny."
East Asia's growth would be better than other sub-regions
About developing Asia, a group of 45 nations in the Asia-Pacific region, ADB said its economic output could shrink by 0.4%, a minuscule improvement from the earlier estimate of 0.7%.
In 2021, the region could register a growth of 6.8%.
East Asia is expected to grow at 1.6%, steered by the quick recoveries in China and Taiwan.
Safe vaccine will be critical in growth of economies: Sawada
ADB expects regional inflation to reach 2.8% in 2020, a change from the September prediction of 2.9%.
For the current fiscal, ADO revised India's inflation from 4.5% to 5.8%.
"A prolonged pandemic remains the primary risk but recent developments on the vaccine front are tempering this. Safe, effective, and timely vaccine delivery in developing economies will be critical to support the reopening of economies," Sawada added.