AFP, Mumbai

India’s economy grew at a faster pace than expected in the first three months of 2026, official data showed Friday, even as the Middle East war clouds the outlook for the rest of the year.

Gross domestic product rose 7.8 percent in the January-March quarter from the same period a year earlier, helped by a robust services sector, according to data from the statistics ministry.

This was down from the 8 percent recorded in the previous quarter but still above market expectations of 7.3 percent growth.

“GDP growth has been resilient... despite geopolitical tensions,” Teresa John of Nirmal Bang Institutional Equities told AFP, adding that the quarterly figures had also been helped by a solid performance in the industry and construction sectors.

A ministry news release said growth for the 2025-26 fiscal year, which ended in March, came in at 7.7 percent -- up from 7.1 percent the previous year.

Friday’s reading reaffirms India as the world’s fastest growing major economy and will be welcome news for policymakers who face a slate of challenges for the current fiscal year.

Prime Minister Narendra Modi’s government started the March quarter on solid footing, with robust GDP growth and the announcement of a framework for a much-delayed interim trade deal with the United States.

That momentum quickly unravelled because of the Middle East conflict and the latest threat of additional US tariffs potentially delaying a pact with Washington.

India’s trade minister, Piyush Goyal, said on Friday that he hopes to “execute” the first tranche of a deal next month, but the effects of the Iran war remain a pressing concern.