Goldman Sachs Cuts India Growth Forecast To 5.9% For 2026

Goldman Sachs has lowered India’s economic growth projection for calendar year 2026 to 5.9%, down from its earlier estimate of 7%, according to a report released on March 24. The revision reflects changes in assumptions around crude oil prices and supply disruptions linked to geopolitical developments, as per the report.

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The Wall Street firm had earlier reduced its growth forecast to 6.5% on March 13, indicating a continued downward revision over the past two weeks.

Oil Prices And Supply Disruptions

According to Goldman Sachs, elevated crude oil prices remain a key risk factor for India, which is a net energy importer. The report stated that Brent crude is expected to average $105 per barrel in March and $115 per barrel in April before easing to $80 per barrel in the fourth quarter of 2026.

The bank also noted that disruptions in oil supply, particularly around the Strait of Hormuz, are expected to persist until mid-April, followed by a gradual normalisation over the subsequent 30 days.

Higher oil prices have implications for India’s foreign exchange reserves, inflation levels, and fiscal balance, the report said.

Inflation And Rate Outlook

Goldman Sachs has revised its inflation forecast for India to 4.6% for 2026, compared to its earlier estimate of 3.9%, according to the report. The revised projection remains within the Reserve Bank of India’s tolerance band of 2% to 6%.

However, the report indicated that pressures from a depreciating currency could lead to tighter monetary policy. Goldman Sachs expects a 50 basis points increase in the policy repo rate during 2026.

The report also highlighted that market pricing currently indicates expectations of multiple rate hikes over the coming year.

Currency Movement And External Balance

The Indian rupee has depreciated around 4% against the U.S. dollar so far in 2026, after weakening 4.7% in 2025, according to Goldman Sachs data. The report noted that currency depreciation could lead to pass-through effects on domestic prices.

The current account deficit is projected to widen to 2% of GDP in 2026, compared with 1.3% of GDP recorded in the October–December quarter of 2025, as per the report.

The revised projections highlight the impact of global commodity price movements and currency trends on India’s macroeconomic outlook, as outlined by Goldman Sachs in its latest assessment.