Industrial production in India increased at the fastest pace in 16 months in June, adding to signs that Asia’s third-largest economy has escaped the worst of the global recession.

Output at factories, utilities and mines jumped 7.8% from a year earlier after a revised 2.2% gain in May according to figures from the statistics agency in New Delhi, more than double the 3.8% rise expected by economists.

Bloomberg News notes that manufacturing is beginning to recover across Asia as government stimulus worth about $1 trillion starts to kick in and customers order semiconductors, textiles and processed food produced in the region. China’s industrial production rose the most in five months in July and Malaysian output fell the least in seven months in June.

India’s industrial production has benefited from record low interest rates, which have encouraged consumers to borrow to purchase cars, motorbikes and other factory-made goods. The Reserve Bank of India cut borrowing costs six times from October to April to help shield the economy from the worst of the economic downturn.

Consumers in India also have more to spend after Prime Minister Manmohan Singh’s government in the July 6 budget reduced the tax burden on individual incomes, lowered some taxes on companies and announced higher spending to create rural jobs.

Production of consumer durables such as cars, refrigerators, washing machines and air conditioners rose 15.5% in June from a year earlier after gaining 12.5% in the previous month.

Manufacturing output in India rose for a fourth month in July, according to a Purchasing Managers’ Index prepared by Markit Economics. The measure stood at 55.3 last month, unchanged from June. It was the fourth monthly reading above 50, which indicates factory production increased.

Some economists are concerned that factory production may weaken in the coming months as the driest monsoon in five years threatens to curb farm output and hurt the incomes of the 742 million Indians living in the countryside.