The Indian economy is projected to grow at 11 per cent in the current financial year amid the “strong” vaccine drive, Asian Development Bank (ADB) said on Wednesday, while cautioning that the recent surge in Covid cases may put the country’s economic recovery at “risk”.
“India’s economy is expected to grow 11 per cent in fiscal year (FY) 2021, which ends on March 31, 2022, amid a strong vaccine drive,” ADB said in its flagship Asian Development Outlook (ADO) 2021 released on Wednesday.
However, the Asian Development Bank (ADB) cautioned that the surge in COVID-19 cases may put the country’s economic recovery at risk.
For FY2022, India’s GDP is expected to expand at 7 per cent, it added.
Further, it said the gross domestic product (GDP) of South Asia is expected to rebound to 9.5 per cent this year, following a contraction of 6 per cent in 2020, before moderating to 6.6 per cent next year (2022), it said.
ADB said the economic growth in developing Asia is set to rebound to 7.3 per cent this year, supported by a healthy global recovery and an early progress on COVID-19 vaccines. The projected resurgence follows a 0.2 per cent contraction last year.
“The region’s growth is forecast to moderate to 5.3 per cent in 2022. Excluding the newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, developing Asia’s economic activity is expected to grow 7.7 per cent this year and 5.6 per cent in 2022,” said the report.
The report projects that most economies in developing Asia will see healthy growth this year and in 2022.
Developing Asia comprises 46 members of ADB list on the basis of geographic group. These include new industrialized economies, countries in Central Asia, East Asia, South Asia, Southeast Asia and the Pacific.
The report said in China, strong exports and a gradual recovery in household consumption will boost economic activity this year.
China’s gross domestic product (GDP) is forecast to expand 8.1 per cent in 2021 and 5.5 per cent in 2022. East Asia’s GDP is expected to grow 7.4 per cent in 2021 and 5.1 per cent in 2022, it said.
The report said rising exports are boosting some economies in Developing Asia amid strengthening global economic activity, including a rebound in manufacturing.
Progress on the production and delivery of COVID-19 vaccines has contributed to this momentum, but the pandemic remains the biggest risk for the region as potential delays in vaccine rollouts or significant new outbreaks could undermine growth.
Increasing geopolitical tensions, production bottlenecks, financial turmoil from tightening financial conditions, and long-term scarring like learning losses due to school closures are among other risk factors, said the report.
Growth is gaining momentum across developing Asia, but renewed COVID-19 outbreaks pose a threat to recovery, said ADB Chief Economist Yasuyuki Sawada.
“Economies in the region are on diverging paths. Their trajectories are shaped by the extent of domestic outbreaks, the pace of their vaccine rollouts, and how much they are benefiting from the global recovery,” Sawada said.