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India’s CAD to Widen to 2.5 Percent of GDP

India’s CAD to Widen to 2.5 Percent of GDPIndia’s CAD to Widen to 2.5 Percent of GDP

India’s current account deficit will widen to 2.5% of the GDP in the current fiscal due to higher oil prices that has been accentuated by rupee depreciation, Moody’s and other experts have said, DNAIndia reported. Rupee last week dropped to a record low of 70.32 to a US dollar as political turmoil in Turkey and concerns about China’s economic health continued to support safe-haven assets and weighed on emerging market currencies. Joy Rankothge, vice president and senior analyst at Moody’s Investors Service said while the weaker rupee will benefit exports at the margins, it is unlikely to reverse the trade deficit, which hit a five year high of $18.02 billion in July. “India’s current account deficit is likely to widen to 2.5% in FY 2018-19, up from 1.5% in fiscal 2017 due to higher oil prices and strong non-oil import demand as domestic demand accelerates,” he said. “Net oil imports accounted for 2.6% of GDP in FY 2017-18 and will increase further in fiscal 2019.”

 

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