Current account deficit to widen to $ 30 billion in FY2018, says ICRA

Current account deficit to widen to $ 30 billion in FY2018, says ICRA

India News

Credit rating agency ICRA in its report noted that it expects higher oil and gold imports to enlarge India’s current account deficit to ~USD 30 billion (1.2 percent of GDP) in FY2018 from ~USD 20 billion in FY2017 (0.9 percent of GDP), arresting the trend of moderation recorded for four consecutive years since FY2014. However, the pressure related to the financing of a larger current account deficit would abate with the resumption of NRI deposits in FY2018. “ICRA expects a rise in the prices and import volumes of crude oil and gold to enlarge the Indian current account deficit to ~USD 30 billion in FY2018 from ~USD 20 billion in FY2017. While merchandise exports may rise by five to six percent in FY2018, partly led by the higher value of commodity-intensive exports, global trends do not augur well for a significant improvement in the services trade surplus and remittances in FY2018,” said principal economist ICRA, Aditi Nayar. “Since FY2014, a combination of lower crude oil and/or gold imports has helped curtail India’s current account deficit, absorbing the impact of declining merchandise exports, services trade surplus or remittances in some of these years. This cushion would not be available in FY2018,” added Nayar.