Rising Oil Prices Weigh on India's Economic Growth

India's economic outlook is facing increasing pressure due to rising oil prices and inflation, according to BNP Paribas. The brokerage said that higher crude oil prices and commodity inflation would remain a 'material challenge' for India in the near term.

The Reserve Bank of India now has less room to keep interest rates unchanged as Brent crude has risen above $100 a barrel, the report stated. India's macro indicators have remained resilient, supported by strong credit growth, auto sales, and improving employment data.

However, several high-frequency indicators have started showing signs of moderation. Manufacturing PMI has fallen to its lowest level since August 2021, while growth in new orders and steel production has declined.