Goldman Sachs has upgraded its macroeconomic forecast for India for calendar year 2026 to 6.8%, in the wake of the recent US-Iran peace accord, which has seen global crude oil prices tumbling significantly and India's overall economic outlook improving. The brokerage also trimmed down its inflation and current account deficit (CAD) expectations due to moderating energy prices and favourable domestic fundamentals.

Key Highlights

• Goldman Sachs raised India's 2026 GDP forecast to 6.8% amid easing crude oil prices and stronger demand.
• Lower inflation, improved current account outlook, and softer oil prices strengthen India's macroeconomic growth prospects.

In its latest report, India: Improved Macro Outlook After the US-Iran Deal, Goldman Sachs said softer oil prices have significantly reduced macroeconomic risks for India, a major crude oil importer. “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% year-on-year,” Goldman Sachs said.

Lower Crude Prices Improve India’s Macro Outlook

Falling crude prices are likely to help curtail the inflationary pressures and lower import costs and improve fiscal position of India, the brokerage added. Energy price reductions are also expected to lead to lower subsidy costs, especially for fertiliser and to cap the need for increases in retail prices.

Goldman Sachs trimmed down its headline inflation forecast for CY26 to 4.4%, while also slashing its current account deficit (CAD) target to 1.1% of GDP. It also sees India running a balance of payments surplus of 0.7% of GDP, which corresponds to a more robust external sector, with increased remittance inflows.

Also Read: India Records 7.7% GDP Growth in FY26, Highest in Four Years: Report

Strong Domestic Economy Supports Growth

India's economy showed strength despite the geopolitical turmoil in West Asia, as the fiscal and quasi fiscal measures mitigated most of the surge in energy costs, the investment bank said.

It also revealed a more robust-than-expected level of economic activity in the first quarter of CY26, as real GDP growth rose by 7.8% year-on-year, driven by increased investment activity and continued growth in services.

Goldman Sachs says that the subsequent collapse in crude oil prices will provide relief for consumers' budgets and give a boost to demand in the second half of the year, after the fuel price hikes earlier this year had slightly dampened consumer spending.

Fiscal and External Sector Outlook Improves

According to the report, softer commodity prices - particularly lower crude oil and global urea prices - are expected to reduce fiscal pressures by lowering subsidy expenses.

The brokerage added that declining energy costs have substantially reduced the likelihood of further increases in petrol and diesel prices, easing cost pressures across petrochemical products and supporting lower core inflation.

Despite the improved outlook, Goldman Sachs cautioned that weather-related uncertainties and the lingering effects of earlier fuel price increases could remain short-term risks to consumption before growth gathers further momentum later in the year.