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HomeEconomyNomura raises India's current account deficit estimate amid fears of slowing exports

Nomura raises India's current account deficit estimate amid fears of slowing exports

MUMBAI (Reuters) – Research house Nomura expects India’s current account deficit (CAD) to triple as a percentage of gross domestic product (GDP) this fiscal year, saying a global economic slowdown will further distort the country’s trade imbalance.

The research house said in a report on Sept. 5 that the Indian dollar is now expected to rise to 3.5% of GDP this fiscal year from 1.2% last year. It had previously forecast the share at 3.3% of GDP.

In addition, India’s trade deficit edged down to 28 $700 million in 2018, up from a record 30 There was little relief in August. Both import and export growth slowed down, but the slowdown in export growth was more obvious. Slowing global growth is likely to further weigh on exports for months and cause the trade deficit to keep rising. ”

The Nomura India Trade Normalization Index (NINI) excluding base and seasonal effects shows that export growth has fallen to close to 26% 8 , which was 48% higher than the pre-pandemic level 2022 in June. In contrast, imports over the same period have grown from 78% down to 60%.

Nomura emphasized that the monthly average trade deficit for the current fiscal year ending in August was about 26 billion dollars compared to last year’s average deficit of 26 billion dollars.

“High monthly trade deficits are increasingly become the norm, not the exception. External sector risks remain high,” the research house said.

It added that while foreign direct investment (FDI) flows may remain stable, they are less likely to Possibly fully offsetting weakness in portfolio flows.

This would result in a negative primary balance of payments.



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