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CAD may widen to 3 percent.

New Delhi: Current account deficit of India is expected to rise to 3 percent of GDP in the July-September quarter of current fiscal, from 2.4 percent in the preceding quarter.

ICRA Principal Economist Aditi Nayar said, "CAD would widen to USD 68-73 billion (2.6 percent of GDP) in FY 2019 from USD 48.7 billion in FY2018 (1.9 percent of GDP), if the price of the Indian basket of crude oil averages at USD 72/barrel in FY2019." ICRA expects the current account deficit to widen sharply to USD 19-21 billion or 3 percent of GDP in Q2 (July-September) FY2019, from the modest USD 7 billion in Q2 FY2018, led by higher crude oil prices and gold imports, the credit rating agency said in a statement.

The CAD, which is the difference between the inflow and outflow of foreign currency, stood at 1.9 percent of GDP in 2017-18 fiscal and 0.6 percent of GDP in 2016-17. The agency however noted that the subsequent correction in crude oil prices has eased concerns regarding the size of the current account deficit in October-March period of current fiscal. Brent crude futures which was trading around 80 dollar to a barrel in September, has fallen to around 62 dollar a barrel.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Dec 9, 2018
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