New Delhi, June 26: Global investment bank Goldman Sachs has revised India’s GDP growth forecast for 2026, increasing it to 6.8% from the previous estimate of 6.5%. This adjustment is attributed to a decline in global crude oil prices and reduced supply chain challenges, following peace talks between the U.S. and Iran.
The investment bank has also raised its GDP growth forecast for India for the fiscal year 2027 by 40 basis points to 6.5%.
In its latest report, Goldman Sachs noted that the significant drop in crude oil prices has mitigated risks for the Indian economy, prompting the revision of its forecasts.
Additionally, the bank has lowered its inflation estimate by 0.2 percentage points to 4.4% and adjusted the current account deficit forecast down by 0.2 percentage points to 1.1% of GDP. Goldman Sachs now anticipates that this year’s balance of payments (BOP) will remain in surplus at 0.7% of GDP.
The investment bank stated that better-than-expected economic activity in the first quarter of 2026, coupled with lower crude oil prices, led to an upward revision of its growth outlook. Strong investments and robust activity in the services sector resulted in India’s real GDP growth reaching 7.8% year-on-year in the first quarter.
However, Goldman Sachs expects that the earlier rise in fuel prices will slow consumption growth in the second and third quarters. Nevertheless, the decline in oil prices has significantly reduced the need for further increases in retail fuel prices, limiting additional pressure on domestic spending after the third quarter.
The report also indicated that a softening of global commodity prices is likely to reduce the government’s subsidy bill for fertilizers and petroleum products.
Regarding inflation, Goldman Sachs mentioned that lower crude oil prices have considerably diminished the risk of further increases in petrol and diesel prices, alleviating pressure on petrochemical products and leading to a reduction in both core and headline inflation estimates.
The report highlighted that lower oil prices and improved remittance flows have positively impacted India’s external sector outlook.
However, Goldman Sachs believes that weather-related uncertainties and the earlier rise in fuel prices may create temporary disruptions in consumption before the economy accelerates towards the end of the year.
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