By Kimberley Kao


India's economic growth remained robust in the January-March quarter as the conflict in the Middle East clouds the outlook.

Gross domestic product grew 7.8% from a year earlier in the three months ended March, government data showed Friday. That compared with the revised 8.0% growth in the previous quarter and exceeded the 7.2% median forecast in a Wall Street Journal poll of economists.

Manufacturing rose 7.3% from a year earlier, compared with 11.8% growth in the same period last year. Construction activity accelerated 8.4%, while private consumption growth grew 7.1%.

Real GDP for the fiscal year ended March was estimated to have grown by 7.7% compared to 7.1% a year earlier.

The data suggests the economy remained on solid footing before the full effects of the Middle East conflict filtered through to domestic activity.

India's economic outlook has become more challenging in recent months as higher oil prices, capital outflows and a weakening rupee raise risks to growth and inflation. The conflict has disrupted shipping through the Strait of Hormuz, pushing up energy costs and adding pressure to global supply chains.

"Given India's significant dependence on the strait for energy imports, the conflict adversely impacted the domestic economy," CareEdge Ratings said in a note ahead of the data release.

Still, the January-March quarter was only partially exposed to the fallout because the conflict intensified toward the end of the period, it said.

The Reserve Bank of India earlier on Friday left interest rates unchanged, citing uncertainty over the inflation outlook and the economic impact of higher energy prices.

"Going forward, we remain cautious, as elevated crude oil and gas prices due to prolonged Middle-East supply disruption [have] already resulted in higher industrial input costs, posing a growing headwind to domestic demand," Goldman Sachs Research said in a note.


Write to Kimberley Kao at kimberley.kao@wsj.com


(END) Dow Jones Newswires

06-05-26 0709ET