India’s economy expanded by 7.8% in the quarter ending June, well ahead of analyst expectations and signalling continued resilience in one of the world’s fastest-growing major economies.
A Reuters poll had forecast growth of 7.1% for the period, making the actual result a comfortable outperformance that mirrors the 7.8% expansion recorded in the previous quarter.
Strong performances in financial services, real estate, information technology, and professional services were the primary drivers behind the robust quarterly result.
India’s Ministry of Statistics and Program Implementation noted that manufacturing and services sectors saw sharp improvements during the June quarter, even as agriculture and allied sectors reported only tepid growth.
Aastha Gudwani, India chief economist at Barclays, told CNBC’s Inside India that the Iran war has not impacted India’s growth as feared by many analysts earlier in the year.
Of the 20 high-frequency indicators tracked by Barclays, only seven showed the April-to-June quarter average growth rate running slower than the January-to-March quarter, Gudwani explained.
She added that consumer demand has stayed “robust,” with manufacturing and service sectors, automobile sales, and loan growth also holding up really well.
India’s central bank had projected a more conservative 7.0% expansion for the June quarter and forecast overall growth of 6.7% for the financial year ending March 2027.
Earlier this month, the Reserve Bank of India warned that while the economy had remained “resilient” amid geopolitical uncertainty, growth was expected to slow over the course of this financial year.
The RBI cautioned that “the turbulent global economic environment” was likely to weigh on domestic activity, with energy prices and supply chain pressures remaining “elevated and uncertain.”
El Niño conditions pose an additional risk, with the central bank warning of a potentially deficient and uneven south-west monsoon that could threaten farm output and rural demand.
Inflation has climbed steadily for nine consecutive months, reaching 4.45% in July, reflecting the growing pressure of elevated energy prices on the broader Indian economy.
Despite this inflationary trend, the RBI opted not to raise interest rates at its August policy meeting, diverging from the approach taken by several of its Asian peers.