Goldman Sachs Raises India’s 2026 Growth Forecast to 6.8% After U.S.-Iran Deal
New Delhi — Goldman Sachs has raised its forecast for India’s economic growth in calendar year 2026 to 6.8% from 6.5%, citing lower global oil prices and easing supply chain disruptions following the U.S.-Iran peace agreement.
The investment bank also increased its forecast for fiscal year 2027 growth by 40 basis points to 6.5%.
In a report titled “India: Improved macro outlook after the US-Iran deal,” Goldman Sachs said the sharp decline in crude oil prices had reduced risks facing the Indian economy.
The bank lowered its headline inflation forecast by 0.2 percentage points to 4.4% year over year and reduced its current account deficit projection by the same amount to 1.1% of gross domestic product. It now expects India to record a balance-of-payments surplus equal to 0.7% of GDP.
“The Indian economy remained resilient through the Middle-East shock, as fiscal and quasi-fiscal measures absorbed much of the increase in energy costs and limited pass-through to consumers,” the report said.
Goldman Sachs said stronger-than-expected economic activity during the first quarter of 2026, combined with lower crude prices, prompted the upward revision.
India’s real GDP expanded 7.8% year over year during the quarter, supported by resilient investment and strong services activity.
The bank expects consumption growth to moderate in the second and third quarters because of earlier fuel price increases. However, it said falling oil prices had substantially reduced the need for additional retail fuel price hikes, limiting further pressure on household spending after the third quarter.
Lower global commodity prices are also expected to reduce the government’s subsidy costs for fertilizer and petroleum products.
“The sharp correction in global urea prices should reduce upside risk to the fertilizer subsidy bill versus our earlier expectations… together with lower oil prices, should help ease near-term fiscal pressures,” the report states.
Goldman Sachs said lower crude prices had reduced the risk of further increases in gasoline and diesel prices while easing pressure on petrochemical products. It consequently lowered its projections for both core and headline inflation.
The combination of declining oil prices and stronger remittance inflows has also improved India’s external-sector outlook, according to the report.
Goldman Sachs cautioned that weather-related uncertainty and the lingering effects of earlier fuel price increases could weigh on consumption in the near term before economic growth gains further momentum later in the year. (Source: IANS)
