India's Economy Posts Robust Growth Despite Mideast Energy Shock

By Kimberley Kao

India's economy maintained a solid pace of growth in the April-June quarter, showing resilience even as the Middle East conflict clouded the outlook.

Gross domestic product grew 7.8% from a year earlier in the three months ended June, government data showed Monday. That compared with revised 8.6% growth in the previous quarter and exceeded the 7.5% median forecast in a Wall Street Journal poll of economists.

The latest growth data is the first set of growth data to fully reflect the effects of the conflict in the Middle East.

Manufacturing output rose 9.2% from a year earlier, accelerating from 8.3% growth in the same period last year. Construction activity and private consumption growth also strengthened.

The data suggest the economy has weathered geopolitical risks better than economists initially expected.

Still, India's outlook has become more challenging as the Middle East conflict pushes up oil prices and pressures capital flows and the rupee, raising risks to growth and inflation.

The country remains heavily reliant on external energy sources, with crude-oil imports accounting for more than 88% of domestic consumption as of July, government data showed.

India's crude-oil import bill jumped 56% to $63.37 billion for the April-July compared to the same period a year earlier, according to data from the oil ministry.

El Nino and a deficient monsoon are also emerging as economic risks, Citi Research said in a note.

Investment activity showed signs of disruption at the height of the Middle East conflict, though recent data point to a partial recovery, Citi said.

The Reserve Bank of India earlier this month left interest rates unchanged, saying it wanted more clarity on the inflation outlook and the economic impact of higher energy and food prices.

The central bank nudged up its real GDP growth forecast for the current fiscal year to 6.7% from 6.6%.

"Growth resilience should give the Reserve Bank of India room to normalize monetary policy, but whether this translates into a sustained revival in portfolio inflows remains uncertain amid intense global competition for capital," ANZ Research said in a recent note.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

August 31, 2026 06:50 ET (10:50 GMT)