QuantEco Research | Q2 FY26 GDP - A turbocharged growth print
Download ReportQuantEco Research | Q2 FY26 GDP - A turbocharged growth print
India’s Q2 FY26 GDP growth at 8.2% yet again beat market expectations by almost 100 bps. It was a quarter that bore testimony to several pulls and pressures. Clearly frontloading of exports to US ahead of the impending tariffs hike, along with the announcement of GST rationalization, galvanized production in select sectors meaningfully. This coupled with continued support from Government capex spending significantly offset the impact of excessive monsoon rains, 50% tariff effective from Sep-25 and GST led demand deferment/inventory adjustment in select sectors. This underscores the resilience of domestic economy amidst a challenging global backdrop.
Looking ahead, growth drivers could see a shift in H2 FY26 vis-à-vis H1. Although Q3 GDP growth may moderate somewhat relative to Q2, it is still expected to remain resilient. The real test of momentum will unfold in Q4 FY26, when the durability of consumption particularly urban demand, the resilience of India’s exports amid US tariffs, and the trajectory of government expenditure will come under spotlight. Considering the sizeable upside of nearly 100 bps to H1 FY26 GDP estimate, we revise our full-year growth projection upward to 7.2%, from 6.6% previously. We continue to ascribe a further potential upside of 20 bps, contingent on the successful conclusion of the US-India trade agreement by end-CY25.