The growth estimate of India which was expected to reach 7.4 percent previously was truncated to 7 percent on account of demonetisation, weak investment and agricultural slowdown, said the new ADB report.
Economic growth in developing Asia remains broadly stable, but a slight slowdown in India has trimmed the region’s growth outlook for 2016.Asian Development Bank (ADB) Report 2016.
In a supplement to its Asian Development Outlook 2016 Update report, ADB has downgraded 2016 growth for Asia to 5.6 percent, below its previous projection of 5.7 percent. For 2017, growth remains unchanged at 5.7 percent.
India’s tempered growth projection to 7 percent from the previously forecast 7.4 percent in 2016 is due to weak investments, a slowdown in the country’s agriculture sector, and lack of available cash due to the government’s decision to ban high-denomination banknotes.ADB
The junking of old 500 and 1,000 rupee notes will likely affect largely cash-based sectors in the country, including small- and medium-scale businesses.
The effects of the transition are expected to be short- lived and the Indian economy is expected to grow at 7.8 percent in 2017 .
ADB said South Asia is the most dynamic part of the region, with growth expected at 6.6 per cent this year, down from the previous forecast of 6.9 percent. South Asia's growth is estimated at 7.3 percent in 2017.
China, it said, is on course to grow 6.6 percent this year and 6.4 percent in 2017.