India's current account deficit widens to 9 year high

India's current account deficit (CAD) widened in the  third quarter of 2022 (July-September) as high commodity prices and a weak rupee increased the country's trade gap, data from the Reserve Bank of India (RBI) showed.

In absolute terms, the current account deficit was $36.40 billion in the second quarter of fiscal year 2022/23, its highest in more than a decade. As a percentage of GDP, it was 4.4%, its highest since the June quarter of 2013.

The CAD was $18.2 billion, or 2.2% of GDP, in the preceding April-June quarter, while the deficit was $9.7 billion, or 1.3% of GDP, in the same quarter a year earlier, Reuters reports.

In a statement, the RBI linked the widening deficit to the increase of "the merchandise trade deficit to $83.5 billion from $63.0 billion in Q1 2022/23 and an increase in net outgo under investment income".

In its Financial Stability Report released after the data, it said the widened trade deficit reflected "the impact of slowing global demand on exports, even as growth in services exports and remittances remained robust".

The median forecast of 18 economists in a Dec 5-14 Reuters poll was for a $35.5 billion CAD in the Q3 of 2022.

The RBI said services exports reported growth of 30.2% on a year-on-year (y-o-y) basis, driven by exports of software, business and travel services, while net services receipts increased sequentially and y-o-y.

Private transfer receipts, mainly representing remittances by Indians employed overseas, rose by 29.7% to $27.4 billion from a year earlier.

The country's balance of payments (INBOP=ECI) recorded a deficit of $30.4 billion compared to a $31.2 billion surplus in the same quarter a year earlier.