Goldman Sachs lowers India's 2026 growth forecast to 5.9%, predicts a 50 basis point rate hike

(1) In a report released on Tuesday, Goldman Sachs lowered its economic growth forecast for India in the 2026 calendar year from the previous 7% to 5.9%. The main reasons are the surge in oil prices caused by the Iran war and supply disruptions in the Strait of Hormuz. As a net energy importer, India faces significant risks in foreign exchange, inflation, and fiscal stability. (2) Based on new assumptions regarding oil prices and the duration of supply disruptions, Goldman Sachs forecasts Brent crude oil prices will reach highs of $105 in March and $115 in April, then fall back to $80 in the fourth quarter. It is expected that the disruption in oil flow through the Strait of Hormuz will last until mid-April and return to normal within 30 days thereafter. (3) Affected by these factors, Goldman Sachs raised its inflation forecast for India in 2026 from the previous 3.9% to 4.6%, and predicts the policy interest rate will be increased by 50 basis points.