MUMBAI: India’s current account deficit widened in July-September from the previous quarter after an increase in imports but it remains well below levels posted in 2015, central bank data showed on Tuesday. India posted a current account deficit of $3.4 billion, or 0.6 percent of gross domestic product, in the July-September quarter, wider than the $300 million or 0.1 percent of GDP posted in the previous quarter. But it compares with a deficit of $8.5 billion, or 1.7 percent of GDP, posted in July-September last year, and is likely to comfort investors as emerging markets face a period of uncertainty due to expected rate hikes by the U.S. Federal Reserve.
India also said the balance of payments was at a surplus of $8.5 billion, compared with a deficit of $900 million a year ago. “Core imports increased sharply in July-September, pushing the deficit higher, to still comfortable levels,” said Abhishek Upadyay, economist at ICICI Securities Primary Dealership.
“Current account deficit for the entire fiscal will be closer to 0.5 percent of GDP, which can be funded easily via stable flows such as foreign direct investments.” Although India has not been immune to foreign investor selling since the election of Donald Trump as U.S. president sparked a shift of flows from emerging markets into the United States, analysts believe the country is among the better placed in emerging markets.
