Indian Economy Shows Resilience Despite Global Headwinds, Strong Domestic Demand: RBI Bulletin

Mumbai, August 25, 2026: The economy has demonstrated notable resilience to the ongoing global headwinds, characterised by buoyant domestic demand and rising manufacturing and services activity, the latest Reserve Bank bulletin said on Tuesday.

Economic Activity Remains Strong

An article in the August bulletin also said the recovery in southwest monsoon in July helped kharif crop sowing reach closer to normal acreage, partly mitigating some of the risks to the agriculture sector.

However, the global economic outlook continues to be shaped by geopolitical frictions in West Asia and fresh tariffs by the US, said the article on 'State of the Economy'.

"The momentum of Q1 2026-27 continued in July with most of the high-frequency indicators reflecting sustained manufacturing and services activity, and double-digit expansion in merchandise exports and imports," it said.

Inflation And Liquidity

The article further said while headline consumer price index (CPI) inflation edged up above the target, it was primarily on account of supply-side pressures. Stable core inflation reaffirmed the lower pass-through of cost pressures.

"Liquidity conditions eased, supporting credit growth and ongoing investment activity. Foreign capital inflows rebounded, reinforcing the external sector," it added.

Financial conditions are characterised by high credit growth, comfortable liquidity, and softening G-sec (government securities) yields supported by a rebound in capital inflows.

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RBI Clarifies Bulletin Views

The central bank, however, 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.

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