India's economy likely to sustain sound growth dynamic through 2025 and 2026, says OPEC

Organization of the Petroleum Exporting Countries or OPEC has stated in a monthly update that India's economy has shown ongoing steady momentum over the past weeks, following strong economic growth in 1H25 of 7.4%, y-o-y, in 1Q25, and 7.8%, y-o-y, in 2Q25, driven by strong private consumption and solid expansion in the services sector. This comes despite global uncertainties and ongoing trade-related disputes with the US, following the US's decision to raise tariffs on Indian imports to 50%, compared with an average tariff rate of less than 3% for India in 2024. Manufacturing activity improved in October, alongside sound momentum in services.

Following strong growth in 1H25 and expected continued sound momentum in 3Q25, India's economy is likely to sustain a sound growth dynamic through 2025 and 2026. Slowing food inflation, expanded welfare spending, and a modest boost to urban incomes from tax cuts and the GST reform are all contributing to higher purchasing power, underpinning continued strength in household spending through the second half of 2025. OPEC noted that the trade-related impact currently appears to be limited, and it is expected that the tariffs introduced so far will be reduced through future negotiations.

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