Following the recent US-Iran peace deal, India’s growth outlook for calendar year 2026 has been revised upward to 6.8 per cent by Goldman Sachs.
In a report titled “India: Improved macro outlook after the US-Iran deal”, Goldman Sachs raised its CY26 gross domestic product (GDP) growth forecast to 6.8 per cent and lowered its projections for inflation and the current account deficit. It had earlier projected the economy to grow at 6.1 per cent in the current fiscal year.
In its report, Goldman Sachs said the sharp decline in oil prices has reduced macroeconomic risks for India.
“On balance, with the recent downward revision in the oil price forecast by our commodities team ($82/bbl average in Q3-Q4 CY26 versus $92/bbl earlier, and $75/bbl average in CY27 versus $80/bbl earlier), we raise our real GDP growth forecast for CY26 by 0.3 percentage points to 6.8 per cent year-on-year,” Goldman Sachs said.
It further said that Financial Year 2027 is expected to be the first full financial year after the pandemic in which India’s economic growth falls below the 7 per cent mark. The economy expanded 7.7 per cent in FY26, supported by strong consumption and investment activity.
The firm also lowered its retail inflation forecast for FY27 to 4.9 per cent from 5.1 per cent earlier.
“India’s economy remained resilient despite disruptions arising from the West Asia conflict, as fiscal and quasi-fiscal measures absorbed much of the increase in energy costs and limited the pass-through to consumers,” it said.
It also cited stronger-than-expected economic activity in the first quarter of CY26 as a factor supporting the upward revision in its growth forecast. India’s real GDP grew 7.8 per cent year-on-year during the quarter, driven by resilient investment activity and robust expansion in the services sector.
Goldman Sachs lowered its current account deficit forecast for CY26 by 20 basis points to 1.1 per cent of GDP and now expects a balance of payments surplus of 0.7 per cent of GDP.
Recently, S&P Global Ratings lowered India’s GDP growth forecast to 6.6 per cent for the current fiscal year, citing energy stress, a sub-par monsoon and slowing global growth.
“We project real GDP growth will slow to 6.6 per cent in the fiscal year ending in March 2027, compared with 7.7 per cent in fiscal 2026, amid energy stress, expectations of a sub-par monsoon and slowing global growth,” S&P said in its report.
S&P’s FY27 growth projection is in line with the Reserve Bank of India’s estimate of 6.6 per cent.