Goldman Sachs Cuts India's 2026 Growth Forecast

Goldman Sachs has cut its India GDP growth forecast for 2026 to 5.9%, down sharply from 7.0% just weeks ago, representing a 110 basis point downgrade in a single month. The revision marks the second cut in March alone, following an intermediate reduction to 6.5% on March 13. The bank cited rising crude oil prices from supply disruptions near the Strait of Hormuz and a 4% rupee depreciation against the dollar as the primary drivers.

Goldman describes the current oil shock as "qualitatively different" from previous episodes, simultaneously hitting import costs, currency stability, and inflation expectations. The bank raised its India inflation forecast to 4.6% for 2026 and now expects a 50 basis point repo rate hike from India's central bank. The current account deficit is projected to widen to 2% of GDP from 1.3% previously.

The downgrade stands in stark contrast to more optimistic forecasts from the IMF (7.3%), World Bank (6.5%), and India's own Reserve Bank (7.3%), though these institutions have not yet adjusted for the recent geopolitical shock. Sectors most exposed include oil marketing companies and auto, while IT and pharma may benefit from rupee weakness. The divergence between Goldman's bearish outlook and official estimates could become a key debate for emerging market investors in the coming weeks.