Indian economy remains well supported by steady domestic demand, says OPEC
OPEC stated in a latest monthly update yesterday that India’s latest economic data continues to point to strong economic expansion. Real GDP growth stood at a revised 8.6%, y-o-y, in 1Q26 and remained exceptionally strong at 7.8%, y-o-y, in 2Q26, considerably above expectations. The 2Q26 figure was supported by a broad-based expansion in domestic demand, with private consumption increasing by 7.1%, y-o-y, and fixed investment by almost 12%, y-o-y. Manufacturing growth accelerated to 9.2%, y-o-y, while financial, real-estate and professional services grew by a particularly strong 12.1%, y-o-y. Overall, the data underscores the resilience of the Indian economy despite elevated energy prices and a challenging global environment.
Additionally, more recent data suggests that this strong momentum continued into 3Q26. Industrial production accelerated to 8%, y-o-y, in August from a revised 7.4%, y-o-y, in July, with manufacturing output rising by 9%, y-o-y, and electricity and gas generation by 12.3%, y-o-y. Capital-goods production remained particularly strong, increasing by 16.9%, y-o-y, while consumer-durables output rose by 11.1%, y-o-y, pointing to continued strength in investment and discretionary consumption. Vehicle demand has also remained robust. Overall retail sales of two-wheelers, as well as passenger and commercial vehicles, increased by 31.8%, y-o-y, in September, compared with 17.5%, y-o-y, in August. However, tractor sales fell by 12.6% on a month-on-month basis. This followed a decline of 25%, m-o-m, in August, reflecting some emerging weakness in agricultural demand following the poorest monsoon in a decade.
According to OPEC, reflecting the strong growth dynamic in 1H26, which is expected to continue into 2H26 and 2027, India’s 2026 economic growth forecast is well supported to stand at 6.6%, unchanged from the previous month’s assessment. The growth forecast anticipates some sequential moderation in 2H26. The Indian economy remains well supported by steady domestic demand, as reflected in the latest domestic data, and benefits in part from continued government-led support measures, alongside prudent monetary policies. The latest inflationary trend may have a limited dampening effect on consumption going forward, although price developments have remained relatively well contained so far. With steady momentum projected through the end of 2026, the Indian economy is expected to maintain its robust expansion in 2027.
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