Global brokerage firm Goldman Sachs has upgraded its outlook for India’s economic growth and lowered its estimate of the country’s current account deficit (CAD) after the announcement of the India-US trade deal. The firm cited the positive impact of lower US tariffs on Indian exports as a key reason for the improved assessment.Reacting to the development, Goldman Sachs said it has raised its forecast for India’s real GDP growth in calendar year 2026 (CY26) by 20 basis points to 6.9 per cent year-on-year.
The brokerage said the revision reflects the benefit of reduced tariffs imposed by the United States on Indian goods.“We upgraded our forecast for India’s real GDP growth in CY26 by 20bp to 6.9 per cent yoy reflecting the lower US tariffs,” Goldman Sachs said in its assessment, as per news agency ANI.
Current account outlook improves
On the external front, the brokerage has also revised down its estimate of India’s current account deficit. Goldman Sachs said it has lowered its CAD forecast by around 0.25 per cent of GDP to 0.8 per cent of GDP in CY26 following US President Donald Trump’s announcement to reduce tariffs on Indian exports.“Following President Trump’s announcement of tariff reduction, we had lowered our estimate of India’s current account deficit by around 0.25% of GDP to 0.8% of GDP in CY26,” the firm noted.A narrower current account deficit is widely seen as a positive sign for the economy, particularly for a developing country like India.
Rupee performance and currency view
Goldman Sachs also pointed out that pressure on the Indian Rupee has eased since the trade announcement. The brokerage said the rupee was the best-performing emerging market currency over the past week.However, it does not expect much further appreciation from current levels. The firm explained that any increase in portfolio inflows after the conclusion of the India-US trade deal is likely to be offset by a gradual unwinding of the short forward book, along with continued accumulation of foreign exchange reserves by the Reserve Bank of India (RBI).
Interest rates seen on hold
On the monetary policy front, Goldman Sachs maintained its view that India’s rate-cut cycle has come to an end. The brokerage expects the RBI to keep the policy repo rate unchanged at 5.25 per cent through CY26.The firm said downside risks to economic growth have eased following improved external conditions, reducing the need for further policy easing.
Trade deal backdrop
The positive reassessment follows a joint statement issued by India and the United States on February 6, which outlined a framework for an interim agreement on reciprocal and mutually beneficial trade.The interim deal includes sector-specific tariff reductions and came after President Trump announced on February 2 that “reciprocal” tariffs on Indian exports to the US would be lowered from 25 per cent to 18 per cent.
