An article titled State of the Economy published in the Reserve Bank of India’s (RBI’s) June Bulletin has stated that an adverse south-west monsoon could pose headwinds to the domestic growth and inflation outlook, even as the global economic landscape remains fragile. It also noted that geopolitical tensions and trade disruptions persisted despite the recent interim peace deal in West Asia.
The article observed that the global economic environment remains fragile, even after some respite from the interim US-Iran peace agreement. It further noted that ‘any breakdown of the agreement may reignite material risks in terms of inflation expectations, disruption of critical energy infrastructure, delayed investment spending, food security concerns, an adverse financial stability outlook, and structurally lower growth.’
Despite a challenging global backdrop, the Indian economy grew by 7.8 per cent in Q4 2025-26, supported by private consumption and fixed investment. It said high-frequency indicators for the first two months of 2026-27 suggest sustained economic momentum. Consumer Price Index (CPI) inflation remained anchored despite a pickup in May. India’s external sector also remained resilient, supported by strong FDI inflows and adequate foreign exchange reserves.
The article further noted that the Indian economy entered this period of turbulence with stronger fundamentals than many other economies, enabling it to better absorb external shocks. Meanwhile, the central banks said the views expressed in the Bulletin article are those of the authors and do not represent the views of the Reserve Bank of India.
