CAD widens to 2.5% of GDP in Q3 on account of a higher trade deficit

In absolute terms, the CAD was $16.9 billion in the October-December 2018 period, up from $13.7 billion in the year-ago period

The country's current account deficit widened to 2.5 per cent of GDP in third quarter of the current fiscal from 2.1 per cent a year ago, primarily on account of a higher trade deficit, the RBI said Friday.

In absolute terms, the CAD, or the gap between inflow and outflow of foreign exchange in the current account, was $16.9 billion in the October-December 2018 period, up from $13.7 billion in the year-ago period.

The deficit, however, had moderated to $19.1 billion or 2.9 per cent of GDP in the preceding quarter (July-September).

"The widening of the CAD (current account deficit) on a year-on-year basis was primarily on account of a higher trade deficit at $49.5 billion as compared with $44.0 billion a year ago," the Reserve Bank of India (RBI) said in a statement.

The CAD increased to 2.6 per cent of GDP during the April-December 2018 period, from 1.8 per cent in April-December 2017 on the back of widening of the trade deficit.