Current account deficit likely to reach three-year high of $43.8 billion in FY12
Exports may face significant adverse conditions from increasing uncertainty and volatility in the global economy, primarily due to rising commodity prices, especially crude oil after Russia’s invasion of Ukraine.
Exports may face significant adverse conditions from increasing uncertainty and volatility in the global economy, primarily due to rising commodity prices, especially crude oil after Russia’s invasion of Ukraine.
A report on Thursday said the country’s current account deficit is likely to reach a three-year high of 1.8% or $43.81 billion in FY12, against a surplus of 0.9% or $23.91 billion in FY12.
According to an assessment by India Ratings, the current account deficit (CAD) widened to $17.3 billion or 1.96% of GDP in the fourth quarter of FY22, as against $8.2 billion or 1.03% in the year-ago period, and was down massively from $23.02. billion or 2.74% in Q3, which was a 13-quarter high.
The improvement in key numbers is on account of a significant improvement in merchandise exports in FY12, when it grew 42.4%, as against a negative 7.5% in the pandemic-hit FY12.
But exports could face significant headwinds from rising uncertainty and volatility in the global economy, primarily due to rising commodity prices, especially after Russia’s invasion of Ukraine of crude, the report warned. , and pointed to a lower forecast of global growth by the WTO. (WTO) which sees the global economy to shrink by around 3% in 2022, down from an earlier 4.7% forecast.
The world trade body has projected import growth for India’s major exporting partners such as North America and Europe at 3.9% and 3.7% in 2022, down from 4.5% and 6.8% respectively as earlier forecast.
However, higher oil prices will benefit oil exporting countries such as Saudi Arabia, leading to higher real incomes, and thus, higher import demand which is expected to grow by 11.7% in 2022 from the earlier forecast of 8.7%.
On the other hand, India’s merchandise imports are expected to pick up in FY13 due to rising commodity prices and depreciating rupee.
The agency expects exports of goods worth $112.5 billion, a growth of 17.7% in the first quarter of fiscal 2013, an increase of 85.7% compared to the same quarter of the previous fiscal.
Merchandise imports grew by 44.1% to $120.9 billion during April-May 2022 and are expected to be $182.9 billion.
Further, the rupee is expected to average 77.1 against the US dollar in Q1, down 4.5% over Q1 FY22.
Merchandise exports grew by 29.2% to a record $116.8 billion in Q4 of FY22, up 20.4%, despite a higher base effect of Q4 of FY21.
Import volumes from top exporting partners such as the US and Europe grew by 9.7% and 8.3%, respectively, in Q4. As a result, total exports exceeded the target of $400 billion, surpassing a lifetime high of $421.8 billion in FY12, up from $296.3 billion in FY2011, a growth of 42.4%, while negative 7.5 per cent in FY2011. % Was.
FY23 so far has been encouraging as exports grew by 22.9% in April-May. But if Ukraine’s war continues, which could lead to stalemates in the developed world and continued supply chain disruptions, exports could be hit, the report warned.
Major commodities such as petroleum products, iron and steel, aluminum and its products, pearls, precious and semi-precious stones, sugar, motor vehicles and cotton yarn contributed about 72.2% to the export growth, which ranged from 14-158%. growing in. Price terms in Q4.
Gold imports fell 54% in the fourth quarter after seven quarters as demand fell to the same level in the quarter due to the start of the third wave of the pandemic.