India’s Current Account Stays in Surplus on Weaker Imports

India’s current-account stayed in surplus for a third straight quarter, helped by a narrower trade gap.

Current account, the broadest measure of trade, was a surplus $15.5 billion, or 2.4% of gross domestic product, in the three months ended September, the Reserve Bank of India said in a statement in Mumbai on Wednesday. The median in a Bloomberg survey of nine economists was for a surplus of $14.9 billion.

Key Insights

  • The current account posted a record surplus of $19.80 billion in the April to June period, while it was in a deficit of $7.6 billion, or 1.1% of GDP, in July-September 2019
  • The surplus narrowed from the previous quarter as the trade deficit widened, the RBI said
    • Merchandise trade deficit was $14.8 billion in July-September versus $10.8 billion the previous quarter and $39.6 billion a year ago
  • Imports were subdued during the quarter on the back of a broader slump in consumption, which accounts for more than 60% of India’s GDP. Stable to lower oil prices also helped in bringing down India’s overall import bill while exports were sluggish given a global slowdown
  • Remittances by Indians employed overseas and other private transfers fell from the previous year but rose 12% from April-June to $20.4 billion
  • Foreign exchange reserves saw an accretion of $31.6 billion on balance of payments basis last quarter, compared with $5.1 billion a year ago, the RBI said

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  • Net foreign portfolio investment was $7 billion as compared with $2.5 billion a year ago, mostly reflecting purchases of Indian stocks
  • To read the full RBI statement, click here

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