Indicators pointing to continued robust growth trend in 2Q25 for India

Organization of Petroleum Exporting Countries or OPEC stated in a latest monthly update that India has maintained strong economic growth in 1Q25, and indicators are pointing to a continued robust growth trend in 2Q25. India’s 1Q25 GDP growth stood at 7.4%, y-o-y, as reported by India’s central statistics office. This growth level is up from a revised level of 6.4%, y-o-y, in 4Q24. In gross value-added terms, 1Q25 growth was largely supported by a rise of 4.8%, y-o-y, in manufacturing, a rise of 7.3%, y-o-y, in the services sector, and a considerable rise of 10.8%, y-o-y, in construction, amid a sharp rise in public capital expenditures. Agriculture growth eased somewhat, standing at 5.4%, y-o-y, but remained strong, supporting the rural recovery.

On the expenditure side, private consumption softened, and government consumption contracted due to lower current spending, while fixed investment jumped to 9.4%, y-o-y. The strong capex spike is seen as temporary, leading to more modest sequential growth expectations ahead. Central government capital expenditure surged by 68%, y-o-y. In light of the ongoing sound expansion, business sentiment indicators, including the PMIs for May, point to continued robust growth in India. Additionally, inflation fell further in April and has now moved further below the midpoint of the central bank’s inflation target of 4%.

OPEC noted that strong economic growth from 1Q25 of 7.4% is projected to moderate somewhat throughout the year, with quarterly growth numbers standing at an estimated average of around 6.3%. In 2026, growth is projected to pick up to a quarterly average of 6.5%, y-o-y, with a modest acceleration from the first to the second half reflecting expectations that US tariffs will ease in the very near term and have only a limited impact on India’s broader growth trajectory. In addition, new trade agreements, as recently announced with the UK, may also provide a solid basis for externally supported growth going forward.

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