Goldman Sachs has upgraded India’s economic growth forecast after easing geopolitical tensions improved oil prices and macroeconomic conditions globally
New Delhi
Goldman Sachs has raised India’s GDP growth forecast for calendar year 2026 to 6.8 per cent from the earlier estimate of 6.5 per cent, citing improved macroeconomic conditions following the US-Iran peace agreement that has lowered global crude oil prices and eased supply chain disruptions.
The global investment bank also increased its FY27 GDP growth forecast by 40 basis points to 6.5 per cent, according to its latest report titled India: Improved Macro Outlook after the US-Iran Deal.
Goldman Sachs said the sharp decline in crude oil prices has significantly reduced risks to the Indian economy, prompting an upward revision of its growth outlook. The report also lowered the country’s headline inflation forecast by 0.2 percentage points to 4.4 per cent year-on-year and reduced the current account deficit projection by 0.2 percentage points to 1.1 per cent of GDP.
The investment bank now expects India’s balance of payments to record a surplus of 0.7 per cent of GDP during the year, reflecting stronger external sector conditions.
According to the report, the Indian economy remained resilient during the Middle East conflict as fiscal and quasi-fiscal measures absorbed much of the rise in energy costs, limiting the impact on consumers.
Goldman Sachs said stronger-than-expected economic activity in the first quarter of calendar year 2026, combined with lower crude oil prices, supported the revised growth projections. India’s real GDP expanded 7.8 per cent year-on-year during the quarter, driven by resilient investment activity and robust growth in the services sector.
While the bank expects consumption growth to moderate during the second and third quarters due to the earlier increase in fuel prices, it believes the recent decline in crude oil prices has significantly reduced the need for additional retail fuel price hikes, easing pressure on household spending later in the year.
The report also said softer global commodity prices are expected to reduce the government’s fertiliser and petroleum subsidy burden, helping ease near-term fiscal pressures.
However, Goldman Sachs cautioned that weather-related uncertainties and the lingering impact of earlier fuel price increases could remain short-term challenges for consumption before economic momentum strengthens further during the remainder of the year.
