India CAD to Reach 2.8% of GDP

India’s current account deficit is likely to touch 2.8% of GDP in the current financial year on surge in crude oil prices and moderate growth in exports, a report said. The merchandise trade imbalance is also expected to rise to $188 billion in FY19, compared with $160 billion in FY18, according to Ecowrap, a State Bank of India research report, PTI reported. “Against the backdrop of rising oil price and lukewarm export growth, current account deficit is expected to reach 2.8% of GDP ($75 billion) in FY19,” the report said. The trade deficit jumped to $18 billion in July 2018 on account of lukewarm export performance amidst higher import bill, it added. Oil imports registered an annual growth of 57.4% to $12.4 billion, from $7.8 billion in July 2017. The CAD is still expected to be majorly financed by non-debt creating (FDI and FPI) capital inflows, which constitute around 44% of the total capital flows.