Acuité revised upwards forecast for India's current account deficit to USD 50 bn in FY22

As per the preliminary estimates released by the Ministry of Commerce and Industry, India's merchandise trade deficit widened to USD 21.2 bn in Feb-22 from a deficit of USD 17.4 bn in Jan-22. The deficit pressures increased in Feb-22 led by sequential increase in imports along with marginal decline in exports. In value terms, imports rose to USD 55.0 bn in Feb-22 from USD 51. 9 bn in the previous month. On the other hand, exports eased marginally to USD 33.8 bn from 34.5 bn in Jan-22.

While Acuité believes that the growth outlook for India may not have a direct linkage with the geo-political risks emerging from the Russia-Ukraine conflict, the increasing sanctions on Russia by many developed nations can disrupt the global commodity markets and global supply chain of some products, thereby having an indirect impact on the supply side. With a sharp rise in crude oil prices in particular, Acuité expects the trade deficit to also remain elevated thereby having an adverse impact on the terms of trade.

Link to the report

Source : Equity Bulls

Keywords

AcuiteRatings Economy TradeDeficit Exports