By Kimberley Kao
India's economy continued to expand in the second quarter despite lingering concerns about the impact of U.S. tariffs.
Gross domestic product grew 8.2% from a year earlier in the July-September period, official data showed Friday, accelerating from 7.8% in the prior quarter. That beat the 7.4% median forecast in a Wall Street Journal poll, in which all 10 economists had expected growth to slow.
Manufacturing activity strengthened during the quarter, which was up 9.1% compared with 2.2% a year earlier. Construction growth slowed, while private consumption growth picked up to 7.9%.
Government spending contracted 2.7% from a year earlier.
Capital Economics thinks the pace of growth is unlikely to last as trade-related headwinds continue to cloud the economic outlook.
"Punitive U.S. tariffs, should they remain in place, will weigh on the external sector and the drag is likely to be more apparent" in the next quarter, said Capital Economics' Asia economist Shivaan Tandon.
However, strong consumption growth is likely to cushion the blow, thanks to goods and services tax cuts and subdued inflation, Tandon said.
The Reserve Bank of India, which left policy rates unchanged in October for a second consecutive meeting, revised its growth forecast for the current fiscal year to 6.8% from 6.5%.
However, Gov. Sanjay Malhotra said at the time that "growth continues to be below our aspirations," as tariff risks and front-loaded monetary-policy actions play out.
Recent data suggest the Indian rupee may continue to face depreciation pressures, Nomura analysts said, after the rupee hit an all-time low earlier in the month.
"While the RBI has been intervening to limit USD/INR upside, we believe there is a risk of spot breaking higher," Nomura said.
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
11-28-25 0629ET
