Goldman Sachs raises India forecasts

Goldman Sachs has significantly upgraded India's macroeconomic outlook for calendar year 2026 and fiscal year 2027, primarily due to the recent peace deal between the United States and Iran which has led to a sharp decline in crude oil prices. The investment bank raised its real GDP growth forecast for India to 6.8% for CY2026 (from 6.5%) and to 6.5% for FY2027 (from 6.1%). Concurrently, Goldman Sachs lowered its headline inflation forecast for CY2026 to 4.4% (from 4.6%) and its current account deficit projection to 1.1% of GDP (from 1.3%). These revisions are also supported by stronger-than-expected economic activity in India's first quarter of CY2026, resilient investment, and robust services activity. The report highlights that fiscal and quasi-fiscal measures in India helped absorb earlier energy cost increases, limiting the impact on consumers. While short-term headwinds like consumption moderation due to past fuel price hikes and weather uncertainties remain, the overall outlook is more constructive, with reduced fiscal pressures and an improved external sector.