Updated December 21st, 2023 at 10:01 IST
CAD to soften to 1.8% this fiscal: Crisil
India’s merchandise exports reversed course in November with a 2.8 per cent on-year contraction to $33.9 billion after a 6.1 per cent growth in the previous
In the backdrop of robust services trade surplus and healthy remittances, India’s current account deficit is expected to soften to 1.8 per cent in FY24, against the 2 per cent current account deficit posted in the last fiscal, credit rating agency Crisil said on Tuesday.
“While the slackening in merchandise exports has moderated in recent months, it remains to be seen if this trend can sustain. Exports are facing global headwinds in the form of an expected slowdown in the near term and uncertainties on account of the geopolitical situation. That said, the expected deceleration in domestic growth in the second half of this fiscal should keep a check on imports,” Crisil said in its note.
India’s merchandise exports reversed course in November with a 2.8 per cent on-year contraction to $33.9 billion after a 6.1 per cent growth in the previous month. “Core exports fell 2.8 per cent on-year due to a dip in pharmaceuticals, engineering goods, electronic goods, ceramic products and glassware, among others,” the report said.
According to the report, India’s merchandise exports have declined 6.5 per cent on-year to $278.8 billion in April-November 2023 from $298.21 billion in the year-ago period. Merchandise imports, too, recorded a decline of 4.3 per cent on-year in November, falling to $54.48 billion from $63.45 billion last month.
On the other hand, Emkay Global Financial estimates current account deficit to be at 1.4 per cent in FY24. “While the current account deficit in the first half of FY24 stood at 1.2 per cent. With the recent moderation in prices of oil and gold is encouraging, and overall commodity prices on an average are likely to stay lower than in FY23, thus implying that FY24E goods trade deficit is likely to hover at around $250bn (6.7 per cent of GDP vs 7.8 per cent in FY23). We maintain FY24E CAD/GDP at 1.4 per cent,” Madhavi Arora, Lead Economist, Emkay Global Financial said.
Published December 20th, 2023 at 16:28 IST