Goldman Sachs Cuts India's Growth Estimate for 2026

Key Highlights

• Goldman Sachs has revised its growth estimate for India in 2026 to 5.9%, down from its previous forecast of 7%.
• The bank expects a 50 basis point hike in policy rates to counter the impact of a depreciating Indian currency.
• Inflation in India is forecast to rise to 4.6% in 2026, up from the earlier estimate of 3.9%.

Economic Outlook

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Goldman Sachs has reduced its growth estimate for India for 2026, citing a change in assumptions on oil prices and the period of disruption to supplies. Elevated crude prices pose a significant risk for India, a net energy importer. The bank now expects the near-shutdown of flows through the Strait of Hormuz to extend into mid-April before normalizing over the following 30 days. Brent crude oil prices are forecast to average $105 in March and $115 in April before falling to $80 per barrel in the fourth quarter of 2026.

Inflation and Monetary Policy

While inflation is expected to remain within the central bank's tolerance band of 2-6%, Goldman Sachs expects a 50 basis point hike in the policy repo rate to counter the impact of a depreciating Indian currency. The rupee has fallen 4% against the U.S. dollar so far in 2026 after weakening 4.7% last year.

Current Account Deficit

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The bank forecasts that India's current account deficit could widen to 2% of GDP in 2026, up from 1.3% in the October-December 2025 period.

Forecasts

• GDP growth: 5.9% in 2026
• Inflation: 4.6% in 2026
• Policy repo rate: expected to rise by 50 basis points
• Current account deficit: expected to widen to 2% of GDP in 2026