Indo-Asian News Service, Manila, March 24: India will lead in the Asian region with growth at 7.8 percent in the next fiscal and at 8.2 percent in 2016-17, as China’s economy slows, the Asian Development Bank (ADB) said Tuesday.
The bank’s Asian Development Outlook (ADO) report instead projected China’s economic growth to decelerate from 7.4 percent in current fiscal to 7.2 percent next fiscal and 7 percent in 2016-17.
“India is expected to grow faster than China in the next few years. The government’s pro-investment attitude, improvements in the fiscal and current account deficits, and some forward movement on resolving structural bottlenecks have helped improve the business climate and make India attractive again to both domestic and foreign investors,” ADB chief economist Shang Jin Wei said.
India’s growth and investor confidence will improve on the back of the government’s reforms and improved external demand, the ADB report said.
Praising the ‘Make In India’ programme to boost domestic manufacturing, Shang said the “Indian government’s programme is even more striking (compared to that of China)”.
“India is in a stronger position today than what it used to be. The government is making efforts to increase FDI (foreign direct investment) to deal with financial instability,” he added.
As the pace of investment slowed, GDP growth in the People’s Republic China (PRC) continued to decelerate, falling from 7.7 percent year on year in 2013 to 7.4 percent in 2014, the report said.
“Growth still met the government target of about 7.5 percent. As in 2013, the government provided fiscal and monetary support to ensure stability in labour and financial markets but refrained from large-scale stimulus,” it said.
“It thus embraced more closely the new normal of decelerating growth as demographic shifts and the sheer size of the economy make sustaining the high growth rates of the past increasingly difficult.”
The report mentioned further moderate deceleration is forecast for GDP growth in China, to 7.2 percent in 2015 in line with the government target of about 7 percent, and 7 percent in 2016, before the rate stabilizes or rises again.
“The forecast reflects recent trends and recognises that the government’s emphasis on high-quality growth and its ongoing gradual structural reform will likely moderate growth in the next two years,” the report stated.