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Country's current account deficit may be one percent of GDP in FY 2025, ICICI report claims
ICICI Report: Electronics and engineering goods exports grew by 50% and 27% respectively in October-November 2024. The report also warns that despite government efforts to manage gold imports, the trade deficit front is likely to remain under pressure due to the weak global growth scenario. Let's find out what else is in the report.
As per a report by ICICI Bank, India's current account deficit (CAD) is expected to be 1.1% of gross domestic product (GDP) in FY 2024-25 (FY25). The report highlights significant changes in the country's external position recently. According to the report, these changes have come due to trade deficit and foreign portfolio investment (FPI).
"We expect the current account deficit to remain at 1.1% of GDP in FY25," the report said. In November 2024, India's trade deficit reached a record high of USD 37.8 billion, mainly due to gold imports totaling USD 14.9 billion. Besides, imports of non-oil and non-gold products are increasing. It increased 3.5% year-on-year in October-November 2024. While the export of oil declined 36% during the corresponding months, non-oil exports showed positive growth during this period.
Electronics and engineering goods exports jumped by 50% and 27%, respectively, in October-November 2024. The report also mentioned that the trade deficit front is likely to continue facing the brunt of a weak global growth scenario despite some concerted efforts by the government on gold imports. This happens in the wake of rising interest rates globally, with the US Federal Reserve indicating a higher trajectory for rates.
The report said, “Even as the government works on reining in gold imports, the trade deficit scenario remains poor due to the subdued global growth outlook”.
