The Organization of the Petroleum Exporting Countries (OPEC) stated in its latest monthly update that India’s economy has seen a sound performance in 1Q26, carrying over the robust growth dynamic from last year. Economic growth stood at a very robust 7.8%, y-o-y, in 4Q25, following growth of an upwardly revised 8.4%, y-o-y, in 3Q25, 6.7%, y-o-y, in 2Q25 and 7.0% in 1Q25, clearly demonstrating an upward trajectory in 2H25, despite the challenges that the economy was facing in terms of US trade relations.

While it remains to be seen to what extent inflationary pressures may have impacted the economy since March, business surveys have held up relatively well, pointing to a limited softening trend, with macroeconomic spillovers so far relatively well contained. Despite rising energy prices, the immediate impact on inflation has been relatively limited. In India, around 60% of oil consumption is subject to controlled pricing. Aside from a 7% increase in LPG, these prices have largely remained unchanged despite the considerable surge in global energy prices.

OPEC noted that despite the ongoing challenges to the Indian economy, the growth outlook for the near term remains well supported. With steady momentum projected for the end of 2026, the Indian economy is expected to maintain robust expansion in 2027. This forecast is supported by prospects for continued structural reforms, a continued expansion of the manufacturing sector, and fiscal and monetary policy support. As a result, economic growth for 2027 is projected to remain broadly stable, standing at 6.5%, unchanged from the previous month’s assessment.