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New Delhi: In a major endorsement of India’s macroeconomic resilience, global ratings agency Goldman Sachs has upgraded India’s Gross Domestic Product (GDP) projections. From its previous estimate of 6.5%, the agency has reviewed India’s forecast to 6.8% following the encouraging progress of the US-Iran peace talks. Despite the challenges with the US-Iran war, India’s economy has been highly resilient, the agency said in its report titled ‘India: Improved macro outlook after the US-Iran deal’
Despite elevated crude oil and commodity prices over the last two months, India’s fiscal health has remained fairly strong, as the government has delayed passing the higher prices on to customers. Domestic manufacturing sectors dependent on oil and its derivatives- including paints, lubricants, plastics, and chemicals- faced sustained margin compressions and supply chain issues, but these have remained temporary challenges that are expected to ease soon.
Though inflation has been an immediate concern, the recent hope of the resumption of oil supplies through the Strait of Hormuz is expected to ease inflation.
“Lower crude oil prices have also been accompanied by a decline in petrochemical product prices. Although the earlier increases in polymer prices are still likely to lift core goods inflation in the near term, we now expect the impact to be limited (vs. our earlier expectations), with a lower likelihood of incremental price increases across the core goods basket,” the agency said in its report.
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