Goldman Sachs lowers India's 2026 growth forecast to 5.9%

Goldman Sachs lowers India's 2026 growth forecast to 5.9%

Goldman Sachs has revised its growth forecast for India in 2026, now projecting a 5.9% expansion instead of the earlier estimate of 7%.

The revision comes amid rising crude oil prices and supply disruptions, mainly due to the Iran conflict, which are putting additional strain on India's economy as an energy-importing nation.

Inflation and rate hike

Goldman Sachs also expects inflation to rise to 4.6% in 2026, up from an earlier estimate of 3.9%.

The increase would remain within the central bank's comfort zone but could still impact consumers.

With the rupee depreciating by 4% against the dollar, everyday goods could become more expensive for Indians.

To stabilize these economic factors, a rate hike is likely on the cards soon, Goldman Sachs said.

Current account deficit to widen

Goldman Sachs also predicts India's current account deficit will widen from 1.3% at the end of 2025 to around 2% of GDP in 2026.

The widening deficit is largely attributed to high oil prices, which are expected to remain elevated before easing later in the year.

These factors collectively pose challenges for India's economy, making it difficult to sustain its earlier growth trajectory.