India retains top spot in August EMT but inflation, currency risks weigh
India held the top position in August in Mint’s Emerging Markets Tracker (EMT), driven by GDP growth of 7.8% in the April-June quarter and export expansion of 26%, but ranked poorly on inflation and currency stability,…
Source: Livemint · September 23, 2026 at 8:32 AM · AI-assisted report
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KUALA LUMPUR, 23 SEPTEMBER 2026 —
India held the top position in August in Mint’s Emerging Markets Tracker (EMT), driven by GDP growth of 7.8% in the April-June quarter and export expansion of 26%, but ranked poorly on inflation and currency stability, according to the monthly index comparing 12 emerging economies.
Market Impact
The country led the tracker on two key metrics—GDP growth and export performance—while its retail inflation of 4.8% exceeded the Reserve Bank of India’s 4% target by 80 basis points, wider than Malaysia’s 3.2% or Vietnam’s 3.7%. The rupee’s 0.4% appreciation in August was the sixth-worst among tracked currencies, despite the RBI’s special foreign-currency deposit scheme drawing in foreign inflows.
Vietnam, with stronger inflation control (3.7%) and currency stability, placed second despite weaker import cover and stock-market returns. Malaysia ranked sixth, outperforming India on inflation and currency movement but trailing on export growth and manufacturing activity.
The tracker, launched in 2019, evaluates seven high-frequency indicators: GDP growth, manufacturing PMI, export growth, retail inflation, import cover, exchange-rate movements, and stock-market performance. India’s manufacturing PMI slowed to 52.8 in August from 53.5–55 in the prior three months, though it remained the fourth-highest among the 12 economies.
India’s stock-market capitalisation rose 2.7% month-on-month, below peers like Indonesia (3.3%) and China (2.9%). Foreign investors turned net sellers in September, withdrawing ₹17,235 crore ($2.07 billion) after two months of inflows, as rising US 10-year yields (5%) narrowed the yield gap with Indian bonds (7%).
Economists warn of further pressure from US Federal Reserve rate hikes, which could force the RBI to tighten policy sooner than expected. Motilal Oswal Financial Services noted that tighter financial conditions—through higher bond yields and global borrowing costs—are already dampening credit growth, a key driver of India’s first-quarter GDP momentum.
With GDP growth forecasts for FY27 revised down to 7–7.3%, the tracker’s August data signals a slowdown in momentum, even as India remains the region’s strongest performer on core economic activity. For Malaysian investors, the divergence between India’s growth resilience and its inflation and currency challenges offers a cautionary note on emerging-market exposure amid geopolitical and monetary policy uncertainties.
Related: Motilal Oswal Financial Services