India’s current account deficit to widen to 1% of Q2 GDP: Ind-Ra
The current account balance may register a deficit of around $8 billion in Q1 FY25 compared to $5.7 billion surplus in the previous quarter
The current account balance may register a deficit of around $8 billion in Q1 FY25 compared to $5.7 billion surplus in the previous quarter
The RBI released the Q4 data on balance of payments for the financial year 2023-24, for the period between January to March this year.
CAD narrows on a yearly basis but widens sequentially.
The sequential decline in CAD mainly on moderation in the trade deficit to $52.6 bn from $71.3 bn in the previous quarter, coupled with robust services exports
Merchandise exports dropped 13.9% year-on-year to $38.38 billion in March while imports fell 7.9% year-on-year to $58.11 billion.
The rating agency projects imports to contract by 4% in FY24 on the back of healthy growth in FY23, which is estimated to be at 15%.
The CAD stands for the measurement of any country’s trade when the value of the goods and services imported exceeds the value of goods and services exported.
RBI says $30.4 bn worth of foreign exchange reserves were depleted in Q2 vs an accretion of $31.2 bn a year before. FDI inflows at $20 bn in H1 marginally declined from $20.3 billion a year before.
Global headwinds facing merchandise exports can be gauged from the fact that goods exports tumbled in October 2022, first time after February 2021, Ind-Ra says.
The fall in its forex reserves to around $533 billion currently, from a peak of about $634 billion in 2021, is driven in part by India's growing current account deficit, says S&P.