India\u2019s economy grew at the fastest pace in six quarters, underscoring its resilience even as US President Donald Trump\u2019s steep tariffs cloud the outlook.<\/p>\n
Gross domestic product rose 8.2%in the three months through September from a year earlier, the Statistics Ministry said Friday, beating all 38 estimates in a Bloomberg survey of economists and much faster than the 7.4% median forecast. The economy had expanded 7.8% in the April\u2013June quarter.<\/p>\n
In a\u00a0post<\/a>\u00a0on X<\/a>, Prime Minister Narendra Modi called the GDP number \u201cvery encouraging,\u201d saying it reflects the impact of the government\u2019s \u201cpro-growth policies and reforms.\u201d<\/p>\n India\u2019s sovereign five-year bond yield rose as much as 8 basis points to 6.24% on Friday, as markets took the strong data as reducing the chances of an interest rate cut at next week\u2019s policy meeting.<\/p>\n Economists such as Sonal Varma of Nomura Holdings had earlier expected the Reserve Bank of India to cut rates on Dec. 5, but she now says it may be a \u201cclose call.\u201d \u201cIndia\u2019s Goldilocks macro mix \u2014 high growth, low inflation \u2014 is unique,\u201d Varma said.<\/p>\n As a result of the robust data, full-year growth is now projected to be at least 7%, up from6.3%-6.8% earlier, V. Anantha Nageswaran, India\u2019s Chief Economic Advisor, told reporters in New Delhi.\u00a0<\/p>\n While the numbers will be a major boost for Modi, many economists do not expect the momentum to last through the remaining quarters if uncertainty over a trade deal with the US lingers. India, which faces a 50% tariff rate, is among the last major economies yet to sign a trade agreement with Washington.<\/p>\n A jump in manufacturing \u2014 which expanded at its fastest pace in more than a year \u2014 along with stronger financial services activity drove the better-than-expected outcome last quarter. Analysts said the data also suggest the economy benefited from the 100 basis points of interest rate cuts delivered by the central bank earlier this year.<\/p>\n The data confirms that \u201cIndia will remain the world\u2019s fastest growing economy, and the supportive fiscal and monetary policies seem to be contributing to a long-awaited revival of investment demand,\u201d said Shumita Deveshwar, chief economist at GlobalData.TS Lombard.<\/p>\n Modi is trying to shore up growth by spurring consumer and business spending. His government introduced major tax cuts in September, which boosted demand ahead of the festival season. Private consumption, which accounts for almost 60% of GDP, jumped 7.9% last quarter from a year ago. Manufacturing sector grew 9.1%.<\/p>\n Government expenditure fell 2.7% in order to stay on track toward its budget deficit target as the tax cuts eroded revenue.<\/p>\n \u201cSupport this quarter has come from stocking up ahead of the festive season by producers,\u201d said Sakshi Gupta, an economist at HDFC Bank Ltd. Exporters also advanced shipments ahead of Trump\u2019s tariffs taking effect in August, which contributed to the boost, she said.\u00a0<\/p>\n However, the momentum might fade in the coming quarters.<\/p>\n \u201cWhat remains uncertain is whether the jump up in demand seen during the festive season would sustain over the coming months, especially given that urban hiring trends remain tentative.\u201d Gupta said.\u00a0<\/p>\n Some economists also said the data may have been boosted by statistical effects such as a lower deflator, used to strip out inflation from economic output. \u201cDiscrepancies have also contributed significantly to headline GDP growth this quarter,\u201d Varma of Nomura said.<\/p>\n A prolonged stalemate on a US trade deal is also weighing heavily on the outlook. Exports contracted nearly 12% in October from a year earlier, with shipments to the US down 8.6%, data released earlier this month showed.<\/p>\n The International Monetary Fund has lowered its projection for India\u2019s growth next financial year to 6.2%on the assumption that high US tariffs will remain in place.<\/p>\n