Goldman Sachs’ India forecast was cut down following President Trump’s threat to impose a 25% tariff on Indian goods. Global Investment Bank has actually cut India’s growth forecast for 2025 by 0.1 percentage points and even 0.2 percentage points in 2026, citing Trump’s 25% tariffs and escalating US-India trade tensions.
Goldman Sachs’ forecast cuts in India are linked to tension and slowing
Goldman Sachs India’s forecast revision reflects growing concerns about India’s economic slowdown and potential impact on global markets. Trump has criticized India for actually maintaining tariffs “The highest in the world” Also, they explained the most “A fierce and unpleasant non-financial trade barrier in any country.”
Goldman Sachs said:
“In our view, some of these tariffs are likely to be negotiated low over time, with additional negative side risks on the growth trajectory primarily coming from uncertainty channels.”
Revised growth forecasts show measured impacts
The latest Goldman Sachs India forecasts show GDP growth of 6.5% in 2025 and 6.4% in 2026. Despite Trump’s 25% tariff threat, the brokerage expects the final tariff rate could actually settle between 15-20% through negotiations.
Rural consumption recovery may be increasing current rural income, given that it is reflected in strong agricultural activities reflected in higher seeding of summer crops and lower food expansion.
Monetary policy response is expected
Given the revised Goldman Sachs India forecast and rising US-India trade tensions, analysts hope that the Reserve Bank of India will cut 25 basis points in the fourth quarter. The bank also cut its inflation forecast by 0.2 percentage points to 3%, supporting the case of viewability policy measures.
Goldman Sachs pointed out:
“Our inflation forecast means that India includes immediate inflation risk.”
Trump’s 25% tariff continues to create uncertainty in global markets, but the recovery in rural consumption offers some cushion against concerns about India’s economic slowdown that analysts have spoken out at the time of writing.
