Middle East crisis to moderate India’s growth by 0.6 pc to 6.3 pc: ADB Chief Economist

Samarkand, (Uzbekistan), May 5: The ongoing Middle East crisis is going to shade off India’s GDP growth by 0.6 per cent to 6.3 per cent and also stoke inflation significantly in the current financial year, as per the latest update, ADB Chief Economist Albert Park said on Tuesday.
The Asian Development Bank (ADB) in April projected India’s GDP growth to remain “robust” at 6.9 per cent in the current fiscal, and rise to 7.3 per cent in the next fiscal, driven by strong domestic demand. With regard to inflation, ADB had projected at 4.5 per cent for the current fiscal.
For India, Park said, “we do find that growth would be lower by 0.6 per cent (FY27). This is based on our model scenario. But it would not negatively affect growth next year. India would kind of bounce back next.” Inflation would increase by 2.4 per cent this year to 6.9 per cent, he said on the sidelines of ADB Annual Meet here.
“So that’s a bit higher than the inflation impacts for the region (Asia-Pacific), because India is more reliant on imported oil and gas. The growth effect, if you take out China, this negative 0.6 per cent on growth this year is pretty similar to the region as a whole region as well,” he said.
ADB, on April 29, in its special update, lowered the Asia Pacific growth projection for 2026 to 4.7 per cent from 5.1 per cent earlier, weighed down by prolonged West Asia disruptions.
Asked about El Nino’s impact on food production, Park said , “Of course, it’s very uncertain. Obviously, whenever there’s a bad harvest in India, we have an issue. With higher prices. India accounts for a huge part of the global trade in rice. So then whatever happens in India also often has a big impact on other countries.” (PTI)