India to outpace China with 7.2% growth, Goldman Sachs projects
What's the story
Goldman Sachs has projected a global GDP growth of 2.8% in 2027, slightly up from the estimated 2.7% expansion this year. The investment bank's forecast is based on the assumption that falling energy prices and continued investment in artificial intelligence (AI) will offset tighter financial conditions. Jan Hatzius, Chief Economist and Head of Goldman Sachs Research, said this outlook reflects a shift in the drivers of global economic activity, particularly energy prices, technology investment and fiscal policy.
Growth projections
US, Japan, and UK expected to beat consensus growth estimates
Goldman Sachs expects the US, Japan, and the UK to beat consensus growth estimates. South Korea and Taiwan are likely to benefit from sustained demand for AI-related exports.
The bank's commodity strategists expect Brent crude prices to fall to $78 per barrel by end-2027 amid improving supply conditions.
A similar trend is expected in global liquefied natural gas prices as well.
AI impact
AI investment to surge, boosting GDP growth
Goldman Sachs also predicts rise in AI spending, with nominal investment expected to hit $1.8 trillion in 2027 from $1.1 trillion in 2026.
This surge will be largely driven by US hardware investment, which is expected to increase by over $500 billion.
The bank estimates that AI investment will add 0.4% points to global GDP growth next year and even more (0.6% points) when considering statistical undercounting of semiconductor investment and related intellectual property exports in the US economy alone.
India vs China
India's economy to grow by 7.2% in 2027
Goldman Sachs predicts India's economy will grow by 7.2% in 2027, slightly down from the projected 7.9% growth in 2026 but still above the consensus estimate of 6.8%.
In contrast, China's economy is expected to grow by a modest 4.5%, just beating the consensus forecast of 4.4%.
The growth will be supported by exports despite weak consumption and ongoing challenges in the property sector.
US forecast
What about the US and inflation?
Goldman Sachs also projects US economic growth at 2.4%, slightly up from the previous year's projection of 2.3%.
The bank expects global inflation to moderate as energy prices ease, with US core personal consumption expenditures inflation expected to fall to 2.4% by end-2027 from 3.2% at end-2026.
Further monetary tightening in some major economies is expected early next year, followed by room for rate cuts as inflation slows down later on.