Goldman lifts India growth to 6.8%, cuts inflation to 4.4%

MACRO MOOD IMPROVES | Cooling crude eases price pressures, strengthens outlook

ANI

New Delhi

Goldman Sachs has upgraded India's macroeconomic outlook for calendar year 2026 following the recent US-Iran peace deal, raising its real GDP growth forecast while lowering its inflation and current account deficit projections, citing easing oil prices and improving domestic economic conditions. 

In its latest report titled India: Improved macro outlook after the US-Iran deal, the global investment bank said it has revised its forecasts after the sharp decline in crude oil prices reduced risks to the Indian economy. 

"On balance, with the recent downward revision in the oil price forecast by our commodities team ($82/bbl average in Q3-Q4 CY26, vs. $92/bbl earlier and $75/bbl average in CY27, vs. $80/bbl earlier), we raise our real GDP growth forecast for CY26 by 0.3pp to 6.8% yoy, lower our headline inflation forecast by 0.2pp to 4.4% yoy and lower our current account deficit forecast by 0.2pp to 1.1% of GDP," the report said. 

According to Goldman Sachs, India's economy has remained resilient despite the disruptions caused by the Middle East conflict, as government fiscal and quasi-fiscal measures helped cushion the impact of higher energy prices on consumers.

"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 noted. 

The brokerage said stronger-than-expected economic activity in the first quarter of CY26, along with lower crude oil prices, prompted it to revise its growth outlook upward. 

India's real GDP growth in the first quarter came in at 7.8% year-on-year, supported by resilient investment and robust services activity. 

Economy to grow 

6.6–6.8% in FY27: EY

India's economy is expected to grow at 6.6-6.8% in the current fiscal, and a gradual normalisation of global energy markets is expected to ease supply-side pressures, improve cost conditions, and support growth and inflation outcomes during FY27, EY Economy Watch said on Friday. "We expect, in FY27, real GDP growth at 6.6-6.8%, CPI inflation at 4.5%, nominal GDP growth at 12.5%, Govt of India fiscal deficit at 4.4% and current account deficit at 1.5% of GDP," the report said. It said India continues to demonstrate strong economic resilience despite external uncertainties, underpinned by robust economic fundamentals and sustained private sector activity.