Donald Trump’s imposition of a 25% tariff on Indian goods has led Goldman Sachs to predict a lower growth forecast for India, renewing concerns over trade tensions with the US. The projected real GDP growth is now estimated at 6.5% for 2025, a decrease of 0.1% from previous forecasts, and 6.4% for 2026, which is down by 0.2% compared to earlier predictions.
“In our view, some of these tariffs are likely to be negotiated lower over time, and further downside risk to the growth trajectory mainly emanates from the uncertainty channel” Quoted in ANI report. Although growth is expected to slow down, there is a positive aspect regarding inflation.
Tension around trade has also increased wider concerns about investors’ confidence and planning. “Further downside risk to the growth trajectory mainly emanates from the uncertainty channel,” the report quoted once again, pointing to the larger effects rather than just a number on a chart.
The Reserve Bank of India announced on Wednesday that the repo rate will remain unchanged. It is also maintaining its growth rate forecast of 6.5% for the current fiscal year. Additionally, the bank has revised its projection for the Consumer Price Index (CPI) inflation for FY26, lowering it from 3.7% to 3.1%.
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Currently, trade tensions have emerged while inflation brings positivity. Everyone is wondering how these two nations will negotiate and whether India can navigate safely through the upcoming turbulence.
