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Ahead of China, India to remain fastest growing economy in FY19 & FY20: ADB

Friday, July 20, 2018

India will continue to be the fastest growing major economy, ahead of China, with 7.3% growth rate in 2018-19 and 7.6% in 2019-20, the Asian Development Bank (ADB) said yesterday.

The growth in India will be driven by increased public spending, higher capacity utilisation rate and uptick in private investment, said its supplement to the Asian Development Outlook (ADO).

While retaining India's growth rate for current fiscal and the next, ADO said economic growth in China will decelerate to 6.6% in 2018 and further to 6.4% in 2019. China's growth rate was 6.9% in 2017. On India, it said: "In sum, the GDP growth forecast for FY2018 (ending March 2019) is maintained at 7.3%. Growth in FY2019 is expected to rise to 7.6% as measures taken to strengthen the banking system bolster private investment and as benefits kick in from the goods and services tax. Any further increase in oil prices poses a downside risk to growth."

ADB said India is the dominant economy in the South Asia sub-region with its growth gaining momentum at 7.7% in the last quarter ended March of 2017-18, the highest rate of growth since first quarter of 2016-17. This pushed full-year growth to 6.7% (2017-18), a tad higher than estimated in ADO 2018 , largely driven by government spending for both consumption and public administration.

"In the first half of 2018-19, the growth rate is expected to benefit from a low base. Other key drivers of growth include an uptick in public consumption, which is typical before elections, and a recovery in exports following shortages of working capital related to a new goods and services tax," said the ADO supplement.

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