Goldman Sachs Cuts India Growth Forecast Over Trump’s 25% Tariff

Goldman Sachs has marginally lowered India’s GDP projections for 2025 and 2026, citing trade tensions stemming from US President Donald Trump’s proposed 25 %per cent import tariffs. As the geopolitical environment heats up, particularly over India’s import of Russian energy, the brokerage flagged policy uncertainty and its potential impact on growth, even as India remains committed to diplomatic resolution.

GDP Forecast Lowered Amid Tariff Uncertainty

The latest economic assessment by Goldman Sachs sees India’s real GDP growth slowing slightly to 6.5% for CY25 and 6.4% for CY26, marking a downward revision of 0.1 and 0.2 percentage points, respectively. 

The firm attributes this to the uncertainty surrounding the US-India trade relationship, especially following Trump’s comments labelling India’s tariffs as “among the highest in the world” and “strenuous and obnoxious non-monetary trade barriers.” 

Rural Strength Offsets Urban Softness

Despite the trade-related concerns, Goldman Sachs highlighted continued resilience in rural consumption, driven by strong agricultural activity, higher summer crop sowing, and easing food inflation, whichthat are supporting real rural incomes. In contrast, urban indicators such as services PMI remain strong, but air passenger growth has moderated, hinting at mixed momentum.

Inflation Outlook and RBI Policy Stance 

Goldman Sachs also trimmed its inflation forecast by 0.2 percentage points for both CY25 and FY26, bringing it down to 3.0% YoY, attributing the change to lower-than-expected vegetable prices. As per the report, “immediate inflation risks in India are contained,” but they also note that a quick trade resolution or a rise in core inflation could shift their current outlook.

Also Read: IMF Raises India GDP Growth Forecast to 6.4% for FY26 and FY27!

Conclusion

Goldman Sachs’ revised outlook underscores the delicate balancing act India faces as it navigates global trade pressures and domestic economic recovery. While the forecast remains broadly optimistic, the risks tied to US tariffs and geopolitical dynamics remain key variables in India’s near-term growth story.

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