India's Economy Grows 7.8% Amid Middle East Conflict, Impacting Inflation and Trade
India's economy expanded by 7.8% year-on-year in the first quarter of 2026, surpassing expectations despite disruptions from the Middle East conflict. Initially, India's trade prospects improved significantly with a major deal with the European Union and reduced tariffs from the U.S. However, the onset of conflict in Iran at the end of February has posed a severe risk to economic growth, leading to increased inflation and energy supply disruptions. The Reserve Bank of India has adjusted its inflation projection for the financial year ending March 2027 to 5.1%, while lowering the growth forecast to 6.6%. The conflict has inflated India's import bill and pressured the rupee, exacerbated by foreign investor outflows. 
