Goldman Sachs forecasts 2.8% global GDP growth in 2027, supported by AI investment and lower oil prices. India is projected to grow 7.2%.
Goldman Sachs expects global economic growth to improve slightly in 2027, supported by a surge in artificial intelligence investment and easing energy prices. India is projected to grow at 7.2%, ahead of China's estimated 4.5%, although geopolitical tensions and weaker AI spending remain major risks.
The global economy is expected to grow by 2.8% in 2027, slightly higher than the estimated 2.7% expansion in 2026, as increased investment in artificial intelligence (AI) and declining energy prices support economic activity, according to Goldman Sachs Research.
In its latest global economic outlook, the investment bank said lower energy costs and continued spending on AI infrastructure could offset the impact of tighter financial conditions and reduced support from government spending.
Jan Hatzius, Chief Economist and Head of Goldman Sachs Research, expects another year of steady but relatively moderate global economic expansion, although the factors driving growth are likely to change.
The forecast highlights how technology investment and energy market developments are increasingly influencing the direction of the world economy.
Artificial intelligence is expected to remain one of the biggest contributors to global economic growth.
Goldman Sachs projects that global nominal AI investment will increase to $1.8 trillion in 2027, compared with $1.1 trillion in 2026. A substantial portion of the additional spending is expected to come from increased hardware investment in the United States.
The investment includes spending on computing infrastructure, semiconductor technology and other equipment required to develop and operate AI systems.
According to the research, AI investment could contribute approximately 0.4 percentage points to global GDP growth in 2027. In the United States, its contribution to underlying economic growth could reach 0.6 percentage points after accounting for the undercounting of semiconductor investment and related intellectual property exports.
However, Goldman Sachs expects the pace of AI investment growth to moderate compared with earlier periods.
The report also cautions that constraints on infrastructure capacity, regulatory uncertainty, credit market pressures and weaker-than-expected demand could affect future technology spending.
Energy prices are another important factor behind the improved economic outlook.
Goldman Sachs commodity analysts expect Brent crude oil prices to decline to $78 per barrel by the end of 2027 as global supply conditions improve.
The bank also expects international liquefied natural gas prices to ease.
Lower energy prices could reduce production and transportation costs for businesses while easing inflationary pressure on households. Countries that depend heavily on imported energy could particularly benefit from a reduction in international oil prices.
However, the outlook remains uncertain because renewed geopolitical tensions, particularly an escalation of the Iran conflict, could disrupt supplies and push energy prices higher.
Europe may also continue to experience pressure from previously elevated energy costs, as their impact gradually passes through to consumers.
India is projected to remain among the fastest-growing major economies, with Goldman Sachs forecasting GDP growth of 7.2% in 2027.
The projection is lower than the bank's estimated 7.9% growth for 2026 but remains above the broader consensus estimate of 6.8%.
China's economy is expected to expand by 4.5% in 2027, compared with 4.6% in 2026. The bank expects weak domestic consumption and continued difficulties in the property sector to constrain China's domestic demand.
The United States is projected to record 2.4% growth in 2027, slightly higher than the estimated 2.3% expansion in 2026.
The projections suggest that India could maintain a stronger growth trajectory than several other major economies even as the pace of its expansion moderates.
Goldman Sachs also expects global inflationary pressures to moderate in 2027 as energy prices decline.
In the United States, core Personal Consumption Expenditures (PCE) inflation is projected to fall to 2.4% by the end of 2027 from an expected 3.2% at the end of 2026.
The forecast reflects the expected fading impact of tariffs and lower energy-related inflationary pressures.
However, the bank does not expect an immediate shift towards interest rate cuts. Its economists anticipate further monetary tightening in some major economies during early 2027, followed by the possibility of rate reductions as inflation moderates.
This could influence borrowing costs, business investment and financial market conditions across countries.
Despite the relatively positive outlook, Goldman Sachs has warned that risks to its global growth forecast are tilted towards the downside.
A renewed escalation of the Iran conflict could trigger another increase in oil and energy prices. Large government budget deficits could also push up long-term borrowing costs and tighten financial conditions.
The bank has additionally highlighted the possibility of lower-than-expected AI investment. If technology companies reduce infrastructure spending because of capacity constraints, regulatory challenges or weaker demand, the impact could extend beyond the technology sector.
The report also points to early signs…