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19 March 2018
 |
| current account deficit(The Total Investment
& Insurance Solutions) |
India's current account
deficit is expected to be around 1.7 percent of GDP in this financial year,
largely owing to higher oil prices, says a report.
With the December quarter,
current account deficit worsening to 2 percent of GDP, Bank of America Merrill
Lynch (BofAML) raised its current account deficit forecast for this
financial year and for the next fiscal.
The global financial
services major has raised its current account deficit forecast by 10 bps
to 1.7 percent of GDP in 2017-18 and by 20 bps to 1.9 percent of GDP in
2018-19.
According to data released
by the Reserve Bank of India (RBI) on Friday, the current account deficit
rose to 2 percent of the GDP at $13.5 billion in the December quarter, up from
$8 billion or 1.4 percent in the year-ago period, on the back of higher trade
deficit.
On a cumulative
basis, current account deficit more than doubled to 1.9 percent of GDP in
the April-December 2017 period.
"Looking ahead, we
see three pressures on India's balance of payments: higher oil prices will
stick the current account deficit at a relatively higher level; FPI equity
flows in equities should remain tepid given high equity market valuations; and
flows to the Chinese market will likely pick up with A shares entering the
MSCI," the report said.
The report further noted
that the trade deficit has improved to $12 billion in February from $16.3
billion in January. "This should contain the March quarter current
account deficit to $7 billion," it added.The
Total Investment & Insurance Solutions
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