CAD

A slight pullback in commodity prices since the beginning of this year is likely to help the trade deficit average around $23 billion – $25 billion in the next two quarters, but it wouldn’t make a major dent in the overall trajectory, Standard Chartered analysts wrote in the report

Standard Chartered on Wednesday raised its estimate of India’s current account deficit (CAD) as a share of the gross domestic product for 2023, citing higher commodity prices and chances of an export slowdown. The British bank raised its CAD forecast for the fiscal year ending March 2023 to 3.8 per cent of India’s GDP from its earlier estimate of 3.0 per cent — higher than the assessments of peers Morgan Stanley, Goldman Sachs and Nomura.

India’s CAD came in at 1.2 per cent of the GDP last year. A slight pullback in commodity prices since the beginning of this year is likely to help the trade deficit average around $23 billion – $25 billion in the next two quarters, but it wouldn’t make a major dent in the overall trajectory, Standard Chartered analysts wrote in the report.

Only a significant drop in coal prices and crude settling around $90 per barrel would bring the trade deficit under $20 billion, though the likelihood of that happening is very low, they added. India’s trade deficit contracted marginally to $28.7 billion last month from a record $30 billion in July.

(Reuters)