The Indian economy is projected to grow at 11% in the current financial year amid the “strong” vaccine drive, said the Asian Development Bank (ADB) today, while cautioning that the recent surge in the double mutant Covid-19 cases may put the country’s economic recovery at “risk”. “India’s economy is expected to grow 11% in fiscal year (FY) 2021, which ends on 31 March 2022, amid a strong vaccine drive,” ADB said in its flagship Asian Development Outlook (ADO) 2021 released on 28 April.
However, the ADB cautioned that the surge in Covid-19 cases may put the country’s economic recovery at risk. For FY2022, India’s gross domestic product (GDP) is expected to expand at 7%, it said. Further, it said the GDP of South Asia is expected to rebound to 9.5% this year, following a contraction of 6% in 2020, before moderating to 6.6% next year (2022), it said.
ADB said the economic growth in developing Asia is set to rebound to 7.3% this year, supported by a healthy global recovery and early progress on Covid-19 vaccines. The projected resurgence follows a 0.2% contraction last year.
“The region’s growth is forecast to moderate to 5.3% 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% this year and 5.6% 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 the ADB list on the basis of the 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% in 2021 and 5.5% in 2022. East Asia’s GDP is expected to grow 7.4% in 2021 and 5.1% 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.