On Wednesday, Standard Chartered increased its projection of India’s current account deficit (CAD) as a percentage of GDP for 2023, citing rising commodity prices and the potential for an export slowdown.
The British bank increased its CAD forecast for the fiscal year that ends in March 2023 from its previous estimate of 3.0% to 3.8% of India’s GDP, which is higher than the predictions of rivals Morgan Stanley, Goldman Sachs, and Nomura.
The CAD for India was 1.2% of GDP in 2017.
According to Standard Chartered analysts, a minor decline in commodity prices since the start of the year would likely assist the trade deficit average between $23 billion and $25 billion over the next two quarters, but it won’t have a significant impact on the trajectory overall.
Even though the likelihood of that happening is extremely low, they said, the trade deficit could be reduced to around $20 billion only with a big decline in coal prices and crude settling at around $90 per barrel.
India’s trade deficit decreased slightly last month from a record $30 billion in July to $28.7 billion.
