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India is set to remain one of the world’s fastest-growing economies until 2030, fueled by robust GDP growth and positive investor sentiment, according to global brokerage firm Goldman Sachs. Despite global uncertainties, India’s earnings have stabilized, supported by a steady profit growth momentum, which Goldman Sachs expects to persist for the next decade.
In a recent note, Goldman Sachs highlighted that India’s total earnings growth, along with market capitalization, has achieved a compound annual growth rate (CAGR) of 18% over the last five years.
Shift in Profit Pool Towards Investment Cyclicals
Goldman Sachs predicts that as India’s economic evolution continues, the profit pool will increasingly shift towards investment cyclicals, with sectors such as autos, real estate, chemicals, and industrials poised to see the largest rise in profit share. “Consumer cyclicals could see the highest absolute growth,” the brokerage noted.
Moody’s, S&P Align Growth Forecasts
Goldman Sachs’ optimistic outlook is echoed by other global rating agencies. Moody’s Analytics projects that India’s economy will grow at 7.1% in the current fiscal year (FY25). In its Asia Pacific outlook, Moody’s maintained India’s growth forecast at 6.5% for FY2025, with an upward trajectory to 6.6% in 2026. This is attributed to stable consumer demand, improving supply chains, and a resilient economic environment.
S&P Global Ratings also retained its forecast for India’s GDP growth at 6.8% for FY2024-25, despite noting that high interest rates are tempering urban demand. The agency expects the growth rate to rise to 6.9% in FY2025-26.
Inflation and RBI’s Monetary Policy
While India’s economic growth outlook remains strong, inflation—particularly food inflation—remains a hurdle for the Reserve Bank of India (RBI) in making rate cuts. The central bank is cautious, even though inflation has moderated.
“Our outlook remains unchanged: we expect the RBI to begin cutting rates in October at the earliest and have penciled in two rate cuts this fiscal year, ending in March 2025,” noted the report. This cautious approach is driven by inflationary pressures that could affect broader economic recovery efforts, although Moody’s has revised India’s inflation forecast for FY25 down to 4.7% from 5%, signaling better inflation outcomes ahead.
India’s Resilience in a Challenging Global Environment
Despite global challenges, including rising protectionism and uncertainties in export demand across the Asia Pacific region, India’s long-term growth prospects continue to make it an attractive destination for investors.
Goldman Sachs, along with other global agencies, views India’s economic resilience and adaptability as key factors contributing to its sustained growth through 2030.
