FY14 trade deficit to be $156b; CAD at $42b: Citigroup

Tags: News
India's trade deficit for the current financial year is likely to be contained at $ 156 billion, resulting in the current account deficit coming in at $ 42 billion, Citigroup said.

The current account deficit (CAD), the difference between outflow and inflow of foreign exchange, would be about 2.3 per cent of GDP due to the fall in gold and non-essential imports, the financial services major said in a report.

"For the current fiscal year (FY14), we expect the trade deficit to be contained at $ 156 billion vs $ 194 billion in FY13," Citigroup said.

According to official figures, India's exports grew 3.49 per cent in December to $ 26.3 billion, while imports dipped 15.25 per cent to $ 36.4 billion. The fall in imports was largely on account of a decline in gold and silver shipments.

The trade deficit for December stood at $ 10.1 billion.

Gold and silver imports in the April-December period declined 30.3 per cent to $ 27.3 billion from $ 39.2 billion a year earlier. The government and the Reserve Bank of India had taken steps last year to curb gold imports in a bid to contain the CAD.

The government and the RBI expect the CAD to be below $ 56 billion in the current financial year compared with a record $ 88.2 billion, or 4.8 per cent of GDP, last fiscal.

For the April-December period, exports aggregated $ 230.3 billion and imports $ 340.3 billion, while the trade deficit stood at $ 110 billion.

"Going forward, taking into account sequential trends of lower exports and bottoming out of imports, we maintain our estimate of the deficit narrowing to $ 156 billion," according to the report.

On the rupee, Citigroup said though the impact of the US Federal Reserve's tapering has been muted so far, a continued uptick in US treasury yields could put some pressure on currencies such as the local currency.

However, the narrowing of the CAD to below 3 per cent of GDP and high foreign-exchange reserves would provide structural strength to the rupee against broad emerging market volatility.

"We maintain our view of the $/INR likely to trade in the Rs 60-63 range in the next few months," Citigroup said.

The rupee is currently hovering around the 61/$ level.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • 49 per cent FDI in defence should pave the way for modernisation

    There is one industrial sector in India that has been kept out of the purview of the normal cycle of investment and production — defence.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Nigavekar

Necessary yet inadequate boost to education

The finance minister, in the very first minutes of his ...

Zehra Naqvi

We must overcome the fear of death

It is the biggest irony that the only thing that’s ...

Dharmendra Khandal

Jawai leopards and locals can coexist peacefully

At first glance, the Jawai landscape seems like a large ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture