Home / Business / Money / FY15 trade deficit likely at $142 bn; CAD at $39.3 bn: Citi

FY15 trade deficit likely at $142 bn; CAD at $39.3 bn: Citi

According to the Ministry of Commerce and Industry’s data, India’s trade deficit marginally narrowed down to USD 12.22 billion during July. Trade deficit during the period (April-July) of this fiscal year stood at USD 45.31 billion.

FY15 trade deficit likely at $  142 bn; CAD at $  39.3 bn: Citi

India’s trade deficit for this fiscal year is likely to be around USD 142 billion, and the current account deficit for this period is expected to be contained at USD 39.3 billion or 1.9 per cent of the GDP, a Citigroup research report says. According to the global financial services major, continued restrictions on gold imports and strong exports growth helped in keeping the monthly trade deficit of the country stable at an average of USD 11.6 billion during the April-July period.

“With a cumulative trade deficit (April-July) at USD 45.3 billion, we maintain our view of a FY15 deficit at USD 142 billion. Consequently, we expect the FY15 current account deficit to be contained at USD 39.3 billion or 1.9 percent of GDP,” the Citigroup research report said. The current account deficit (CAD) is the difference between outflow and inflow of foreign exchange.

According to the Ministry of Commerce and Industry’s data, India’s trade deficit marginally narrowed down to USD 12.22 billion during July. Trade deficit during the period (April-July) of this fiscal year stood at USD 45.31 billion. “Given recent monthly trends, we maintain our view of the FY15 trade deficit at USD 142 billion vs USD 138.7 billion in FY14,” the report said. The FY15 trade deficit forecast factors in higher gold imports and 11 per cent increase in non-oil/non-gold imports.

“As a result of a wider trade deficit, we expect CAD to increase marginally to USD 39 billion or around 2 percent of GDP from USD 32.4 billion or 1.7 percent of GDP,” Citigroup said. The country’s trade deficit in the last fiscal (FY2014) declined to USD 138.6 billion from USD 190.3 billion in FY13. With regards to rupee the report said that the INR is “likely to trade in the Rs 59-62 band with a positive bias”.

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