More economic woes in future? Asian Development Bank scales down India's GDP growth forecast to 7%

The Asian Development Bank has slashed India's growth forecast to 7% for the current financial year over demonetisation and rolling out the Goods and Services Tax Bill. 

"India's GDP growth is downgraded to 7% in fiscal year 2017-18, a 0.4 percentage point drop from the April forecast. In financial year 2018-19, the forecast is adjusted down to 7.4 per cent, from 7.6 per cent,'' ADB said in its Asian Development Outlook 2017 update.

The report further mentioned, "Growth will further pick up in 2018-19 as the new tax regime improves domestic competitiveness and government efforts to improve the health of the banking sector to aid private investment yield results".

ADB Chief Economist Yasuyuki Sawada said, "Despite the short-term hiccups as firms adapt to the national GST, we believe that continued reform progress will help India remain one of the world's most dynamic emerging economies.'' 

"India's ambitious reform agenda will lead to higher long-run growth for its economy," he added. China is expected to grow 6.7 percent this year and 6.4% next year, the ADB said.

"Growth prospects for developing Asia are looking up, bolstered by a revival in world trade and strong momentum in China," ADB Chief Economist Yasuyuki Sawada said. 

The report says developing Asia is on track to grow faster this year and next buoyed by a pick-up in world trade and China's expansion, but it flagged risks from tightening U.S. monetary policy.