Weekly Economic Outlook: January 26- February 01, 2026
- Remin Francis I R
- Feb 2
- 2 min read
Last week’s economic data gave us a strong momentum in India. India’s industrial production surprised on the upside in December 2025, rising 7.9% year-on-year, up from a revised 7.2% in November and well above the market expectation of 5.5%. This also marks the fastest growth since October 2023. What’s encouraging is that this strength comes at a time when global trade worries, especially around US tariff actions, have been making headlines.
Manufacturing continued to be the backbone of this growth, expanding by 8.1%, slightly lower than November’s 8.5%, but still very strong. Given that manufacturing contributes over 77% of total industrial output, this steady performance matters. Mining output also picked up to 6.8% from 5.8%, while electricity generation rebounded sharply, rising 6.3% after contracting 1.5% in the previous month. Overall, this data pushes back against fears of a sharp domestic slowdown.
On the global front, central banks stayed cautious. The Bank of Canada held its overnight rate unchanged at 2.25% in its January 2026 meeting, sticking to its earlier guidance. While the bank expects GDP growth of just over 1% this year and 1.5% next year, it flagged rising uncertainty due to renewed US tariff threats. Inflation, however, is expected to remain close to the 2% target, helped by excess supply offsetting trade-related costs.
In the US, the Federal Reserve also kept rates unchanged at 3.5%–3.75%. This comes after three rate cuts last year. While two members voted for another 25 bps cut, Chair Powell struck a calm tone, noting that economic activity remains solid and that current rates are appropriate as the economy enters 2026.
India’s external position also strengthened, with foreign exchange reserves rising to a record USD 709,410 million as of January 23, up from USD 701,360 million the previous week, the highest level ever recorded.
China, however, showed signs of strain. Its official manufacturing PMI slipped into contraction at 49.3 in January from 50.1, missing expectations. New orders, exports, and employment all remained weak, while business confidence fell to a six-month low.
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