Global brokerage firm Goldman Sachs has adopted a positive stance on India’s economic prospects after the announcement of the India-US trade deal. The firm has raised India’s real GDP growth forecast by 20 basis points to 6.9 percent for calendar year 2026.
Expectation of relief in current account deficit also
The picture has also improved on the outside. The firm has reduced India’s current account deficit forecast by about 0.25 percent of GDP to 0.8 percent in calendar year 2026. This amendment has been made after US President Trump announced to reduce tariffs on Indian exports.
less pressure on rupee
Goldman Sachs said that after the trade deal, the pressure on the Indian rupee has reduced and the rupee was the best performing currency of emerging markets in the last one week. However, the brokerage believes the scope for further appreciation in the rupee from current levels is limited as potential portfolio inflows could be offset by the RBI raising forex reserves and unwinding of short forward positions.
What is the outlook on interest rates?
The firm has maintained its stance on interest rates. Goldman Sachs expects the Reserve Bank of India to keep interest rates steady at 5.25 percent in calendar year 2026. The brokerage says that due to better external conditions, downside risks to growth have reduced and the rate cut cycle is over.
Investor confidence increased due to trade deal
This positive assessment comes after the joint statement issued on February 6 between India and the US, which announced the framework for a reciprocal and beneficial interim trade agreement. Under this, the outline of sector-specific tariff cuts has been decided. Earlier on February 2, the US President had announced to reduce the reciprocal tariff on Indian exports from 25 percent to 18 percent. According to analysts, reduction in CAD and better growth outlook are positive signs for India’s macroeconomic stability.
