Goldman Sachs Sees India Weathering Global Turmoil, Slowing Domestically

NEW DELHI (ANI)- India is expected to remain relatively insulated from the global economic shocks stemming from a potential trade war between the United States and China, according to a new report by Goldman Sachs.

“In 2025, we believe India will likely be a relatively insulated economy from global shocks emanating out of a potential US-China trade war,” the report stated.

However, Goldman Sachs projected a cyclical slowdown in growth, with India’s GDP expected to decelerate to 6.3% year-on-year. This is attributed to ongoing fiscal consolidation and tighter credit growth due to macro-prudential measures implemented by the Reserve Bank of India (RBI).

The report anticipates that the RBI will adopt a cautious monetary stance, with interest rate cuts beginning in the first quarter. A cumulative reduction of 50 basis points is forecast by mid-year, despite calls for more aggressive easing to support growth.

Retail loan growth may remain subdued, even as interest rates decline, due to continued regulatory tightening.

Goldman Sachs predicts a 25-basis-point cut in the repo rate in February, followed by another in April. The RBI is also expected to maintain a liquidity surplus, allowing overnight inter-bank rates to ease to 5.75%, effectively delivering a total easing of 75 basis points from the current 6.50% level.