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Informist, Tuesday, Mar. 24, 2026

 

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--Goldman Sachs cuts India 2026 GDP growth forecast to 5.9% from 6.5?rlier 
--Goldman Sachs raises India 2026 CPI forecast to 4.6% from 4.2?rlier 
--Goldman Sachs expects 50 bps rate hike by RBI in 2026 
--Goldman: See Brent crude at $100/bbl in Oct-Dec if supply hit for 10 wks 
--Goldman: See Brent crude at $115/bbl in Oct-Dec if oil output also hit 
--Goldman: See Brent crude $80/bbl in Oct-Dec if Hormuz trade resumes mid-May 

 

MUMBAI – Goldman Sachs has reduced its forecast for India's GDP growth for the second time in March as US-Iran hostilities continued, raising risks of higher inflation and interest rates. Goldman reduced the India's GDP forecast for 2026 to 5.9% from 6.5% given on Mar. 13, it said in a report on Tuesday. The firm had expected the GDP growth at 7?fore the US-Iran war began. 

 

Goldman Sachs raised inflation projections due to higher crude oil prices. It expects India's CPI inflation at 4.6% in 2026, higher from 4.2% seen on Mar. 13. Before the war, the firm had expected CPI inflation at 3.9%--below the 4% target of the Reserve Bank of India.

 

The possibility of higher inflation as also pushed the firm to factor in hikes in interest rates this year. The firm expects the RBI to raise interest rates by 50 basis points. The current repo rate is at 5.25%. "Where it is relatively straightforward to interpret market pricing, these policy rate forecasts remain below market-implied outcomes. For example, at the time of writing, we infer that over the coming year markets imply...3-4 (25 bps hikes) by RBI..."

"...while inflation is within both central banks' (India and the Philippines) target bands, currencies have been under depreciation pressure, and FX pass-through to retail prices is likely to be significant," the report said. "...monetary policy will end the year tighter than it otherwise would have been in many countries...this reflects a desire to limit second-round effects via inflation expectations and/or FX depreciation."

 

Goldman's expectations of higher inflation leading to higher interest rates and lower growth stems from the possibility of a prolonged hit to supply of oil if the Strait of Hormuz remains shut. The firm expects Brent oil prices to average $105 per barrel in March and $115 in April if Hormuz remains shut for trade till mid-April. If the Strait of Hormuz opens mid-April and it takes 30 days for flows to normalise, Brent Crude oil could then fall to $80 per barrel in Oct-Dec, the firm said. 

 

However, Brent Crude could remain around $100 per barrel in Oct-Dec if the flows from the Strait were hit for 10 weeks i.e. till mid-May. Further, if damages to infrastructure lead to a prolonged hit to production, Brent Crude may rise to $115 in Oct-Dec, the report said.

 

"These scenarios would imply further upward adjustments to near-term inflation, and downward adjustments to growth, with the latter becoming relatively more important over time," the report said. "We think incremental bad news from here is increasingly likely to be perceived as "growth negative" rather than "inflation positive" by market participants."  End

 

US$1 = INR 93.85

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Anshul Choudhary

Edited by Deepshikha Bhardwaj

 

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