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MOSL: ECOSCOPE-CAD widens to 1.9% of GDP in FY18; Expect it to rise further to a six-year high of 2.5% in FY19

ECOSCOPE: CAD widens to 1.9% of GDP in FY18; Expect it to rise further to a six-year high of 2.5% in FY19

 

• India's current account deficit (CAD) widened to USD13b (1.9% of GDP) in 4QFY18 from USD2.6b (0.4% of GDP) in the year-ago period, led by higher non-oil non-gold merchandise trade deficit. The number is slightly higher than our/consensus estimate of USD12.7b/USD12.4b.
• Capital inflows stood at USD24.6b (3.5% of GDP) in 4QFY18, higher than USD10.4b (1.7% of GDP) in 4QFY17 and also average quarterly levels in FY17/9MFY18. This led to USD13.2b accretion to reserves - the highest in three years.
• Total domestic savings (implied from the difference between investments and CAD) fell marginally to 29% of GDP in 4QFY18 from 29.2% in 4QFY17. Total domestic savings averaged 28.8% in FY18 - the lowest level in at least seven years.
• CAD widened to 1.9% of GDP in FY18 from 0.6% in FY17. Assuming average crude oil price of USD75/bbl this fiscal, we expect India's CAD to widen further to 2.5% in FY19 - the highest level in six years but below the FY10-13 levels.