ADB sticks to nos, says it’ll be 8.2%

NEW DELHI: In a sharp variation from International Monetary Fund’s upbeat assessment of growth prospects for India in 2010, the Asian Development Bank ( ADB) on Tuesday retained its growth estimate for India at 8.2%.

Interestingly, the ADB also stuck to its China’s forecast at 9.6% but marginally revised that for the Asian region to 7.9%. “Better-than-expected results in the first quarter — driven by buoyant exports, strong private demand, and sustained stimulus policy effects — are behind the revision,” the ADB said in a Special Note on economies.

The Manila-based lender also asked governments in the region to end stimulus measures launched during the global economic crisis. International Monetary Fund (IMF) has upgraded India’s growth projection to as high as 9.5% from 8.8% estimated earlier.

India is also likely to go with the ADB’s assessment and not revise its target for the current year. Official estimates peg 2010-11 growth at 8.5%. Finance minister Pranab Mukherjee said on Monday he would stick to his conservative outlook of about 8.5% plus economic expansion for the current fiscal. An ADB economist, however, said recovery’s sustainability will depend on “the correct timing, policy mix and pace at which economic stimulus is withdrawn.

“While most emerging East Asian economies are assured of a sharp V-shaped recovery this year, it is too early to say that the ‘V’ stands for victory,” said Srinivasa Madhur, an ADB senior director. However, despite the upward revision in growth for Asia, ADB warned of downside risks in the second half of 2010 on account of uncertain global environment, unpredictable private domestic demand, and the risks of dramatic capital flows and exchange rate fluctuations.

ADB’s 2011 forecast remained unchanged at 7.2% as the bank expects growth to taper as it expects advanced economies like the US to slow down as stimulus measures are withdrawn. “We need to sustain the recovery and at the same time exit from the unprecedented policy stimulus in the region,” Mr Madhur said.