Increase in merchandise trade deficit to widen Q4 CAD: ICRA

Ratings agency ICRA on Thursday said that it expects India's current account deficit (CAD) to widen to $10-12 billion in Q4 FY2018 from the low $3.4 billion in Q4 FY2017.

The CAD is expected to widen due to an increase in the merchandise trade deficit, even as the services trade surplus is expected to improve, it said.

"As a result, we expect the current account deficit to rise to $46-48 billion in FY2018 (1.8 per cent of GDP) from $15.2 billion in FY2017 (0.7 per cent of GDP)," the agency said.

"ICRA expects merchandise exports and imports to expand by 8-10 per cent in FY2019 to S$335-340 billion and $505-510 billion, respectively, resulting in a widening of the merchandise trade deficit to $170-175 billion in FY2019, unless commodity prices recede significantly."

--IANS

rv-vd/vd