India to grow at 7.4% in FY18 on reforms,consumption boost: ADB

Apr 10, 2017, 01:57
India to grow at 7.4% in FY18 on reforms,consumption boost: ADB

Efforts to maintain financial and fiscal stability will continue to be a modest drag on growth going forward, but continued structural reform will help to maintain growth in the government's target range.

Public investment is expected to strengthen through fiscal expansion as the authorities speed up their implementation of infrastructure projects, according to the forecast.

The Indonesian government set aside Rp 416.1 trillion ($31.2 billion) for education in the 2017 state budget.

"Because small enterprises generate a large share of India's exports and are highly dependent on cash, demonetisation impeded exports of gems, jewellery and garments for a few months before the situation normalised", it noted.

MANILA-An economist from the Asian Development Bank (ADB) said the inward-looking statements of United States President Donald Trump have no significant effect yet on the Philippine economy.

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Strong consumer demand and rising global commodity prices could cause the inflation pace in developing Asia to quicken to 3.0 per cent this year and to 3.2 per cent in 2018, the ADB said.

"This country can invite businesses from developed economies", Tamura said.

"The central bank will have to factor into this delicate balance the future course of U.S. interest rates", it added; hence, "a$3 measured hike in the central bank policy rate is likely".

The report further said that South Asia would continue to be the fastest growing of all subregions, and its combined growth would touch 7% in 2017 and 7.2% in 2018. Although the country's demonetization of high-value notes squeezed consumption, the impact is expected to be only temporary.

Growth in South Asia is expected to hit seven percent this year and 7.2 per cent next year, with India rebounding from demonetisation that temporarily hit the economy.

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The Manila-based lender said that as the U.S. economy continued to strengthen, expectations were for the Federal Reserve to raise interest rates further this year. The region will grow 4.8% in 2017 and 5% in 2018, from the 4.7% recorded past year. -China trade war apparently subsiding, and worries over the U.S. Fed's interest rate hikes easing, Asia's outlook in 2017 may be far better than many feared at the start of the Year of the Rooster.

The government expects GDP to grow between 6.5 percent and 7.5 percent this year, driven by robust domestic consumption, higher fiscal spending and investments, particularly in infrastructure.

Apart from the protectionist statements of Trump, the impact of positive economic data and the increment of US interest rate will likely to affect the Philippine economy. Economies with flexible exchange rates may experience deeper currency depreciation and subsequent higher inflation, while managed currencies will tend to forfeit export price competitiveness.

Further improvements in the US economy will trigger capital outflows from Asia, the ADB said.

Domestic risks to the economic outlook reflect low fiscal and external buffers and subdued investor enthusiasm ahead of parliamentary elections due in April 2017.

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