Mumbai: An adverse south-west monsoon may pose headwinds for the domestic growth and inflation outlook, even as the global economic landscape remains fragile, the Reserve Bank Bulletin said on Monday.

Geopolitical tensions and trade disruptions persisted despite the recent interim peace deal in West Asia, said an article on State of the Economy published in the June Bulletin.

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The global economic landscape remains fragile despite some respite gained through the interim US-Iran peace agreement, the article said.

"Any breakdown of the agreement may reignite material risks in terms of inflationary expectations, disrupted critical energy infrastructure, delayed investment spending, food security concerns, adverse financial stability outlook and structurally lower growth," it noted.

Amid the challenging global environment, the Indian economy grew at 7.8 per cent in Q4 2025-26, supported by private consumption and fixed investment. High-frequency indicators during the first two months suggest sustained economic momentum in 2026-27, it added.

Despite a pick-up in May, the Consumer Price Index (CPI)-inflation remained anchored. India’s external sector remained resilient, supported by FDI inflows and adequate foreign exchange reserves.

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"The Indian economy entered this turbulence with much better fundamentals relative to many other countries to sustain the shock," it said.

The central banks said the views expressed in the Bulletin article are those of the authors and do not represent the views of the Reserve Bank of India.

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