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The latest global projections by the Asian Development Bank has indicated that the South Asian country might experience higher economic growth in the upcoming year.
A press note released by the ADB said, “…ADB notes that the deceleration to 7.1 per cent registered last year was due in part to slower investment growth. Also contributing to the moderation was the impact of the government’s demonetization of high-value currency notes, though this effect is seen as largely temporary,”
ADB noted that Indian economy is likely to experience higher output largely due to the country’s favorable agricultural output as well as foreign direct investment flow and strong domestic demand. Despite that, the projection noted a caution over the fluctuating international market. The note said,
“The ADO expects growth to accelerate through increased consumption, as more new bank notes are put in circulation, and as planned salary and pension hike for state employees are implemented. The public sector will remain the main driver of investment… Exports are forecast to grow by 6 per cent the coming year. Inflation is projected to accelerate to 5.2 per cent in Financial Year 2017 and 5.4 per cent in Financial Year 2018 as the global economy recovers and commodity prices rebound.
“The assessment notes risks from higher oil prices as India imports nearly 80 per cent of its fossil fuel needs. A rapid increase in the price of oil could undermine the country’s fiscal position, stoke inflation, and swell the current account deficit. The report estimates that a $1 increase in oil prices raises the import bill by nearly $2 billion,” according to the ADB’s flagship economic publication here.
On the other hand, ADB’s report indicated that China’s economic output is likely to slow down to 6.5 percent in this year while the slump will continue to 6.2 percent from 6.7 percent last year.