Indian economy to maintain an average growth level of around 6.5% in both 2025 and 2026

Organization of Petroleum Exporting Countries or OPEC stated in a latest monthly report that following the slight rebound and steady growth level in 4Q24, the Indian economy is forecast to maintain an average quarterly growth level of around 6.5% in both 2025 and 2026. This momentum is expected to remain supported by a variety of factors, including gradual ongoing monetary easing in 2025 and 2026, in combination with a growth-friendly budget and other government support measures. Also, inflation has continued retracting, providing room for potential central bank monetary easing measures later in 2025. However, the weakening of the Indian rupee since 2H24 will need further monitoring, as it may influence upcoming monetary policy decisions.

India's economy continued to see sound economic growth in 4Q24. Following a slowdown in India's 3Q24 GDP growth dynamics, 4Q24 GDP growth rebounded. India's 3Q24 economic growth stood at a slightly upward-revised 5.6%, y-o-y, down from 6.5%, y-o-y, in 2Q24, and followed growth of 8.4%, y-o-y, in 1Q24. The 3Q24 slowdown was mainly driven by a contraction in the manufacturing sector, among others.

OPEC noted that following a 4Q24 bounce in the manufacturing sector, an acceleration in agriculture and forestry output and steady growth in the services sector, economic growth in 4Q24 expanded by 6.2%, y-o-y. Business sentiment indicators, including the January PMI, point to continued robust growth. Additionally, inflation fell significantly in January. Inflation has been hovering close to the upper limit of the RBI's target range of 2% to 6% over the past few months, but has now moved towards the midpoint of the central bank's inflation expectations of 4%.

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