Page 12 - FIPI - Policy & Economic Report May 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Figure 2: Real GDP growth (%change) - -Actual and Forecasted

Source: S&P Global Market Intelligence

Global Manufacturing and Business Activity

Global manufacturing and business activity displayed diverging trends across major economies in April
and May 2026. Manufacturing conditions in the United States remained relatively resilient, supported by
inventory rebuilding, AI-related investments, and stronger domestic demand. Businesses increased
precautionary inventory accumulation amid concerns over supply shortages and elevated shipping costs.

In contrast, business activity in Europe weakened significantly. The Eurozone recorded its first decline in
output in 16 months, with both manufacturing and services sectors affected by rising energy prices,
weaker external demand, and supply disruptions. Germany and France experienced particularly weak
conditions, reflecting slowing industrial production and deteriorating business confidence.

Among emerging economies, India remained the strongest-performing major economy in the PMI
surveys, supported by continued expansion in manufacturing and services activity. China also showed
improving momentum, registering its second-highest expansion in nearly two years, aided by stronger
industrial production and policy support.

The global services sector also showed signs of moderation amid affordability pressures and slowing
consumer demand. While manufacturing activity received temporary support from inventory stockpiling,
S&P Global cautioned that underlying demand conditions remain weak across several advanced
economies.

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