Goldman Sachs Upgrades India CY26 Forecast: India-US Trade Deal Boosts GDP to 6.9%, CAD Falls, Rupee Strengthens

Goldman Sachs Upgrades India Growth Outlook Following India-US Trade Deal

Global brokerage firm Goldman Sachs has revised its economic outlook for India, upgrading growth projections and lowering estimates of the country’s current account deficit (CAD) following the announcement of the India-US trade deal. The brokerage cited the positive impact of lower US tariffs on Indian exports as a key driver behind the reassessment. Goldman Sachs raised its forecast for India’s real GDP growth in calendar year 2026 (CY26) by 20 basis points to 6.9% year-on-year, reflecting the benefits of reduced tariffs imposed by the United States.

Current Account Deficit Eases Amid Tariff Reductions

On the external front, Goldman Sachs lowered its estimate of India’s CAD to 0.8% of GDP in CY26, a reduction of around 0.25% of GDP, following the US announcement to reduce tariffs on Indian exports. The brokerage noted that easing CAD pressures is a positive sign for India’s economic stability, as a narrower deficit reduces reliance on volatile foreign capital inflows, strengthens the domestic currency, and signals improved external balance. The reassessment follows a joint statement released by India and the United States on February 6, which outlined a framework for an Interim Trade Agreement. The deal specifies sector-specific tariff reductions, including a cut in reciprocal tariffs on Indian exports from 25% to 18%, initially announced by US President Donald Trump on February 2.

Rupee Performance and Monetary Policy Outlook

Goldman Sachs also highlighted that the pressure on the Indian Rupee (INR) has eased following the trade announcement, noting it as the best-performing emerging market currency over the past week. However, the brokerage expects limited further appreciation from current levels, as any pick-up in portfolio inflows may be offset by the gradual unwind of short forward positions and further accumulation of foreign exchange reserves by the Reserve Bank of India (RBI). On the interest rate outlook, Goldman Sachs maintained its view that the RBI’s policy rate easing cycle has concluded and expects the repo rate to remain unchanged at 5.25% in CY26, as downside risks to growth have receded following improved external conditions.

The India-US trade deal is being widely welcomed by global investors as a catalyst for India’s growth trajectory, currency stability, and macroeconomic fundamentals. By reducing trade barriers, boosting export competitiveness, and strengthening investor confidence, the interim agreement positions India for enhanced economic stability while reinforcing bilateral trade relations with the US.

(This article has been syndicated from ANI)