OPEC has stated in a latest monthly update that following economic growth of 7.4%, y-o-y, in 1Q25, India’s GDP growth rose to 7.8%, y-o-y, in 2Q25, driven by strong private consumption and solid expansion in the services sector. Part of the upside reflects a sharp decline in the GDP deflator to 0.9%, a near six-year low, driven by lower consumer prices and wholesale price inflation, particularly the decline in vegetable prices. Adjusting for the volatility of food items, underlying growth may have been slightly lower. The services sector accounted for more than two-thirds of overall economic activity, while manufacturing remained resilient, recording a slight increase in the second quarter of 2025. Services growth accelerated to a two-year high, expanding by 9.3%, y-o-y, up from 7.3% in 1Q25. Manufacturing also strengthened, reaching a five-quarter high growth mark of 7.7%, y-o-y, up from 4.8% in 1Q25.

India’s economy is expected to sustain a robust growth trajectory through 2025 and 2026. While it is projected to remain the fastest-growing major economy in Asia, this performance aligns broadly with the region’s overall positive momentum. The services sector maintained strong momentum in the first six months. Government capital expenditure has increased and is expected to continue expanding, while domestic consumption has shown healthy growth, particularly in 2Q25.

OPEC noted that the latest GDP data confirmed that domestic momentum has strengthened further. The recovery in consumption has been fuelled by easier credit conditions – following a cumulative one percentage point reduction in policy rates since the start of the year – along with resilient rural demand supported by a strong harvest. Slowing food inflation, expanded welfare spending, and a modest boost to urban incomes from tax cuts have all contributed to higher purchasing power, underpinning continued strength in household spending through the second half of 2025.

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