CAD to remain manageable at 1.2% of GDP in FY18: UBS
The bulk of the narrowing in CAD over the past five years has been largely led by lower oil imports and drop in gold imports, UBS report said.
India has become less vulnerable to external risks and its current account deficit (CAD) is expected to remain manageable at 1.2% of GDP this fiscal, says an UBS report.
According to the global financial services major, though India remains vulnerable in its external position, risks have reduced over the past five years.
"India's current account deficit (CAD) has narrowed from a peak of 4.8% of GDP in 2012-13 to 0.7% in 2016-17 due to the positive terms of trade shocks and policy initiatives, and we expect it to remain contained over the next 2 years," UBS said in a research note.
UBS expects CAD to remain manageable at 1.2% of GDP in 2017-18 and 1.4% in 2018-19. The bulk of the narrowing in CAD over the past five years has been largely led by lower oil imports and drop in gold imports, the report said.
Due to the lower global crude oil prices (which more than halved in the past five years) and the government's oil sector reform, net oil imports have slowed from a peak of $103 billion (5.6% of GDP) in 2012-13 to USD 56 billion (2.5% of GDP) in 2016-17.
Gold imports (gross) have moderated from a high of USD 56 billion (3.1% of GDP) in 2011-12 to USD 27 billion (1.2% of GDP) in 2016-17 on policy measures, including higher import duties on gold.
UBS CAD forecast for this fiscal and financial year 2018 -19 assume global crude oil prices (Brent) to average USD 62.2/bbl and USD 66.2/bbl in 2017-18 and 2018-19, and gold imports to remain reasonable (in the USD 30-35 billion range) on positive real deposit rates available to households, it said.
It further noted that any movement in global crude oil prices, protectionist policies in developed economies and surprises in the global growth recovery impacting external demand are possible risks to the CAD forecast.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Power of Compounding: How many years will it take to reach Rs 3 crore corpus if your monthly SIP is Rs 4,000, Rs 5,000, or Rs 6,000
Power of Compounding: Salary Rs 25,000 per month; is it possible to create over Rs 2.60 crore corpus; understand it through calculations
Reduce Home Loan EMI vs Reduce Tenure: Rs 75 lakh, 25-year loan; which option can save Rs 25 lakh and 64 months and how? Know here
Top 7 Large and Mid Cap Mutual Funds with Best SIP Returns in 5 Years: No. 1 fund has turned Rs 15,000 monthly SIP investment into Rs 20,54,384; know about others
New Year Pick by Anil Singhvi: This smallcap stock can offer up to 75% return in long term - Check targets
11:04 AM IST