India’s current account deficit eases to 0.2% of GDP in December quarter

India’s current account deficit virtually acquired worn out in the December quarter standing at simply $1.four billion due to decrease commerce deficit and an increase in internet companies receipts, in accordance to knowledge launched by Reserve Financial institution of India on Thursday.

CAD eased to 0.2% of GDP in December quarter from 0.9% of GDP in the September quarter.

Non-public switch receipts, primarily representing remittances by Indians employed abroad, elevated to $20.6 billion, up by 9% from their stage a yr in the past. Within the monetary account, internet international direct funding at $10.Zero billion was larger than $7.three billion in Q3 of 2018-19. International portfolio funding recorded internet influx of $7.eight billion – as towards an outflow of $2.1 billion in Q3 of 2018-19 – on account of internet purchases in each the debt and fairness market.

“The CAD narrowed to 1% of GDP in April-December of 2019-20 from 2.6% in April-December of 2018-19 on the back of a reduction in the trade deficit which shrank to $118.9 billion in April-December 2019-20 from $145.1 billion in April-December of 2018-19,” RBI mentioned.

UBS in a report launched on Thursday mentioned since India is a internet oil importer with inelastic demand, motion in crude oil

costs tends to have an necessary bearing on its macro stability dangers together with current account deficit.

“Looking at India’s oil price sensitivity, we calculate a $10/bbl average fall in global crude oil prices narrows India’s CAD by $15bn (0.5% of GDP) and fiscal deficit by 0.1% of GDP if domestic fuel prices are unchanged,” it added.

Brent crude futures dropped 5.5% to 33.eight per barrel on Thursday after Saudi Arabia and the United Arab Emirates introduced plans to enhance manufacturing capability.

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