Indian economy performing strongly despite external headwinds: RBI Bulletin
New Delhi, Sep 25
Notwithstanding the ongoing global turbulence, the Indian economy recorded robust growth of 7.8 per cent in Q1 2026-27, demonstrating resilience through August as evident from high frequency indicators, the RBI's September Bulletin said on Friday.
Supported by strong export growth, the merchandise trade deficit narrowed.
Headline inflation inched up to 4.8 per cent in August, driven by the food and beverages group along with a pickup in fuel and core components.
"System liquidity surplus surged following FCNR (B) deposit flows. A moderate current account deficit in Q1 2026-27 and strong FDI flows supported the external sector, and foreign exchange reserves reached an all time high," the Bulletin said, adding that the economy performed strongly despite external headwinds.
With geopolitical tensions re-escalating in West Asia, the global economy is again confronted with rising energy prices, and increased volatility across various segments of the financial markets.
The escalation of conflict in West Asia has led to a sharp increase in crude oil prices, reigniting concerns of a further disruption in global supply chains and build-up of inflationary pressures.
Alongside, the rise in sovereign yields in some of the major advanced economies has put pressure on government finances.
Despite such a challenging global environment, the Indian economy recorded a strong GDP growth in Q1 2026-27. High-frequency indicators through August reflected sustained demand with segments of industry and services sectors displaying resilience, according to the Bulletin.
Headline CPI inflation picked-up in August 2026. Core inflation excluding precious metals has also increased from ultra-low levels of recent months. India's financial and external sectors are drawing strength from the real economy, although geopolitical tensions and weather-related uncertainties are acting as key downside risks.
System liquidity remained in surplus, following strong FCNR(B) deposit flows. The resultant deposit growth could support ongoing credit growth. Foreign exchange reserves also reached record levels, the Bulletin said.
— IANS
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