ADB trims FY26 growth forecast to 6.5% on baseline US duty impact
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
New Delhi: The Asian Development Bank (ADB) on Wednesday lowered India's growth forecast for FY26 to 6.5% from 6.7% citing the impact of baseline tariffs imposed by the United States and impact of policy uncertainty on investment.Despite the downgrade, India continues to be one of the fastest growing major economies globally. The Reserve Bank of India (RBI) also projected India's gross domestic product (GDP) growth at 6.5% for FY26 from 6.7% earlier. The Indian economy grew by 6.5% in FY25.According to the July Asian Development Outlook 2025, domestic economic activity remains resilient, supported by strong consumption, particularly from a revival in rural demand. "Services and agriculture sectors are expected to be key drivers of growth, the latter supported by a forecast of above-normal monsoon rains," it said.The Manufacturing and Services Purchasing Managers' Index (PMI) indicates stronger performance in India in the first quarter of this fiscal year, compared to other economies in the Asia Pacific region.ADB also noted that India's fiscal position remains healthy, aided by higher-than-expected dividends from the RBI. The central government is on track to meet its fiscal deficit reduction target.In comparison, growth projections for China, the largest economy in the region, are unchanged at 4.7% in 2025 and 4.3% in 2026. "Policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports," the ADB said.For South Asia, ADB revised the 2025 growth forecast down to 5.9% from 6% estimated in the April outlook."Asia and the Pacific has weathered an increasingly challenging external environment this year. But the economic outlook has weakened amid intensifying risks and global uncertainty," said Albert Park, ADB chief economist. "Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth," he added.Looking ahead, India's GDP growth is expected to improve to 6.7% in FY27 driven by rising investments, under the assumption of improved policy clarity and favourable financial conditions, following recent monetary easing. "The baseline expectations of lower crude oil prices will also support economic activity in FY2025 and FY2026," said the ADB.In June, the RBI's monetary policy committee (MPC) cut the repo rate by 50 basis points to 5.5% and reduced cash reserve ratio by 100 bps to 3%, adding ₹2.5 lakh crore in liquidity into the banking system.The next MPC meeting is scheduled for the first week of August.ADB also revised its inflation forecast for India to 3.8% in FY26 from 4.3% estimated earlier, "reflecting faster-than-expected decline in food prices due to better agricultural production."India Ratings and Research (Ind-Ra) Wednesday revised India's growth forecast for FY26 to 6.3% from the previous estimate of 6.6%, due to tariff hikes by the US and a weaker investment climate. The Indian economy is facing both headwinds and tailwinds."Major headwinds are uncertain global scenario from the unilateral tariff hikes by the US for all countries and weaker-than-expected investment climate," said DK Pant, chief economist and head public finance at Ind-Ra."The major tailwinds are monetary easing, faster-than-expected inflation decline, and likely above-normal rainfall in 2025," he added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Fashion Value Chain
27 minutes ago
- Fashion Value Chain
Landmark Group Unveils 'Landmark SKYVUE – The Address in the Clouds', a Luxury Residential Project on Dwarka Expressway
Landmark Group, Gurugram's leading developer, unveils its latest luxury residential project, Landmark SKYVUE, located in Sector 103, Dwarka Expressway. As 'The Address in the Clouds', SKYVUE hints at a lifestyle that invites you to experience modern day Indian luxury that is flexible, expansive, and mindfully designed for modern Indian families. Landmark Group Unveils 'Landmark SKYVUE – The Address in the Clouds', a luxury residential project on Dwarka Expressway Crafted not to impress so much as to serve exceptional living functionalities, the project offers a rare low-density and vastu aligned designed layouts in 500 ft. tall twin towers. The project will offer opulently sized 3BHK+ Utility and 4.5BHK+ Utility residences, blending elevated aesthetics with thoughtful functionality. The project will offer exclusive Skypad pickleball court, SORA Japanese restaurant, Skydeck observatory, and Skydome wellness club focused on cold plunge, healing room, and recovery zones. Strategically situated on the rapidly developing Dwarka Expressway corridor, SKYVUE will offer a seamless blend of accessibility and aspiration. With proximity to IGI Airport, upcoming metro links, and key hubs of Gurugram and Delhi, the location is set to emerge as one of the most sought-after residential zones in NCR. With SKYVUE, Landmark Group continues its legacy of developing timeless spaces that transcend brick and mortar to embody aspiration, artistry, and an elite lifestyle. The project reflects its commitment to creating spaces that are not just lived in, but experienced. Boasting more than 50 amenities focused on wellness, nature, and quality, SKYVUE aims to deliver modern day Indian quality of life to its future residents. With more than 25 years of industry experience, and a design-led approach in collaboration with the architectural firm, ACPL, Landmark is set to deliver its mark on Dwarka Expressway.
Mint
27 minutes ago
- Mint
Gold price rises 200% in six years. How expensive it may become in next 5 years?
Gold prices have delivered stellar returns to investors in 2025. The precious yellow metal on MCX has ascended over 30 per cent, other risky assets like silver surged nearly 35%, and the Nifty 50 index has risen around 4.65 per cent. The BSE Sensex has given around 3.75 per cent, while some Sensex heavyweights like Reliance share price have generated a little over 14 per cent in 2025. Nifty 50 heavyweight HDFC Bank shares have surged around 12.50 per cent. So, gold and silver have outshone other risky assets by a massive margin in YTD. The precious bullions have dominated the market in the long term, too. In six years, the MCX gold rate has risen from around ₹ 32,000 per 10 gm to around 97,800 per 10 gm, delivering a rise of over 200 per cent. According to commodity market experts, gold prices are expected to dominate the list of risky assets. The bears may deliver at least 40 per cent in the next five years, whereas the bulls may become expensive by over 125 per cent. Speaking on the gold price rally in recent years, Santosh Meena, Head of Research at Swastika Investmart, said, "Gold has long held deep emotional and financial value in Indian households. It has also gained prominence as a strategic asset among global central banks in recent years. This shift has accelerated over the past two years, particularly after the Russia-Ukraine conflict, which led to the freezing of a significant portion of Russia's foreign exchange reserves. As geopolitical tensions rise and tariff disputes continue, central banks increasingly turn to gold as a safe-haven asset, contributing to a steady rise in its price." Santosh Meena of Swastika Inestmart said several key factors drive this renewed interest in gold. One of the most notable is the weakening confidence in the US dollar. Many central banks are diversifying their reserves to reduce dependency on the dollar, and gold is emerging as the preferred alternative. Another major driver is the rising US debt-to-GDP ratio, which raises concerns about the long-term stability of the dollar and further enhances gold's appeal as a store of value. The overall geopolitical instability climate also pushes institutional and retail investors toward gold as a reliable hedge against uncertainty. On why gold prices have risen in the last six years, Sugandha Sachdeva, Founder of SS WealthStreet, said, "Gold has delivered outstanding returns of nearly 200% over the past six years, rallying from around ₹ . 34,200 in June 2019 to approximately ₹ . 97,800 per 10 grams in 2025. This exceptional performance has been driven by global macroeconomic shocks, including the COVID-19 pandemic, ultra-loose monetary policies, geopolitical tensions, and heightened financial market uncertainty." The SS WealthStreet expert said that the outbreak of the pandemic unleashed massive economic disruption and led to unprecedented monetary and fiscal interventions. Central banks across the globe slashed interest rates to near zero. They rolled out large-scale quantitative easing programs, injecting liquidity into the system and fueling inflation and currency debasement concerns. Simultaneously, real interest rates turned negative, reducing the opportunity cost of holding gold. Governments deployed aggressive stimulus measures, further expanding the money supply and reinforcing gold's role as a hedge against systemic risk. Sugandha Sachdeva went on to add that a string of geopolitical and financial flashpoints has further reinforced gold's appeal: 1] Russia-Ukraine war (Feb 2022); 2] US banking turmoil (SVB, Credit Suisse – early 2023); 3] Middle East conflict (Oct 2023); 4] Escalating US tariff war under President Trump (2025); 5] Record Central bank gold purchases; and 6] Persistent de-dollarisation efforts globally. "These tailwinds have propelled gold to fresh record highs of over ₹ 1,00,178 per 10 gm in 2025, and the environment remains supportive for structurally elevated prices over the long term," said Sugandha Sachdeva, adding, "While past returns may not be repeated at the same scale, multiple macroeconomic and structural forces point to further upside in gold over the next five years. The continued central bank purchases, strong ETF inflows, de-dollarisation drive, and rising debt levels in the US all point towards prices being meaningfully higher from current levels." On whether gold will be able to deliver this stellar performance again, "The ongoing strategic accumulation of gold by global central banks is likely to be a key pillar that would provide further strength to gold prices. Gold now comprises almost 20% of total central bank reserves against the US dollar's declining share, down from 73% in 2001 to 58% in 2025. Gold has emerged as a key beneficiary of central banks' diversification efforts. A shift towards a multi-polar currency world is eroding the dollar's dominance. Volatility in currency markets makes gold more attractive as a stable reserve asset. Furthermore, burgeoning public debt levels, particularly in the US, raise long-term fiscal risks and erode confidence in fiat currencies, making gold a crucial hedge against currency debasement." Sugaqndha said that ongoing and potential future conflicts (including economic, political, and military) will continue to elevate safe-haven demand. Beyond institutional buying, new channels of demand are emerging, such as China's insurance sector reportedly allocating 1% of its Assets Under Management (AUM) to gold, signifying growing institutional interest. ETF inflows and investor allocations toward non-yielding assets could remain strong if real yields stay suppressed. Moreover, a structurally weak rupee amplifies domestic gold price performance. Sugandha Sachdeva of SS Wealthstreet advised investors to continue investing in gold: "Gold continues to prove its mettle as a long-term store of value and a portfolio diversifier. Amid ongoing global uncertainties, rising global debt, elevated geopolitical risks, currency volatility, and policy-induced distortions, the yellow metal will likely remain a core hedge against systemic risks. Investors may consider systematic accumulation during price corrections and hold a strategic allocation over the next five years to enhance risk-adjusted returns." Regarding how much gold may become expensive in the next five years, Sugandha Sachdeva said, "Gold remains subject to intermittent corrections due to changing interest rate expectations or temporary strength in the US dollar. However, the major floor level is expected around ₹ 75,000-72000 per 10 gm, providing a strong downside cushion to prices. However, the gold price pattern suggests around ₹ 1,05,000 per 10 gm for the year, while for the next 5 years it could trend towards around ₹ 1,35,000 per gm to anywhere around ₹ 1,40,000 per 10 gm." However, Santosh Meena of Swastika Investmart believes that stellar gold price returns may continue in the next five years. Geopolitical tension and a trade war are expected to keep the demand for gold as a safe haven intact. "In terms of performance, gold has delivered an impressive 18% compound annual growth rate (CAGR) in the Indian market over the past five years. If this trajectory continues, gold prices could reach ₹ 2,25,000 per 10 grams within five years. While short-term volatility is natural, the broader structural case for gold remains intact, supported by sustained central bank buying, currency debasement concerns, and the asset's historical role as a financial haven," Santosh Meena of Swastika Investmart concluded. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Deccan Herald
27 minutes ago
- Deccan Herald
Kotak Mahindra Bank's Q1 profits drop more than expected on higher provisions
The bank's standalone net profit fell 47.5% to 32.81 billion indian rupees ($379.42 million) for the quarter ended June 30, down from year-earlier 62.5 billion rupees ($722.75 million), which included a 27.3 billion rupee gain on a stake sale of its insurance subsidiary to Zurich Insurance last year.
