Source: TH
Context:
The Asian Development Bank (ADB) has lowered India’s economic growth forecast for the current financial year (2025-26) to 6.5% from the earlier 6.7%, mainly due to the impact of 50% U.S. tariffs on imports from India. The growth outlook for 2026-27 has also been revised downward to 6.5% from 6.8%.
Key Highlights:
| Dimension | Key Highlights |
|---|---|
| Growth Forecast | • Developing Asia’s growth for 2025 revised: 4.9% → 4.8%. • 2026 forecast cut: 4.7% → 4.5%. • Downgrades due to global uncertainty, especially in India & Southeast Asia. |
| Impact of U.S. Tariffs | • Elevated tariffs cover ~60% of exports to the U.S. • Key affected sectors: textiles, garments, jewellery, shrimp, chemicals. • Likely to weigh on growth in H2 2025-26 and 2026-27. • Merchandise export growth modest, but services exports remain strong. • Investment growth subdued amid trade uncertainty. |
| Domestic Demand & Consumption | • Consumption demand expected to grow faster, aided by lower food prices and tax cuts. • Public investment continues to support growth momentum. |
| Inflation Outlook | • FY26 inflation revised down to 3.1% due to low oil & falling food prices. • FY27 inflation projected at 4.2% as food prices normalize. |
