India Registers $6 Billion Current Account Surplus in Q4FY24
India's current account surplus hits $6 billion in Q4FY24, marking a positive shift after 10 quarters. Exports set to rise by 8% in 1QFY25
Chennai: The current account balance (CAB) is expected to have registered a surplus of around $6 billion or 0.6 per cent of GDP in the last quarter of FY24 after a gap of 10 quarters, finds India Ratings. It also expects the merchandise exports to grow 8 per cent to around $112 billion in 1QFY25.
After Q1FY22, CAB would be in a surplus for the first time in Q4FY24. In the preceding quarter it was in a deficit of $10.5 billion or 1.2 per cent of GDP. CAB for FY24, however, would be in a deficit of 0.6 per cent of GDP. “This would be the lowest since FY17 if we exclude the COVID-19 impacted FY21”, said Sunil Kumar Sinha, Principal Economist, Ind-Ra.
The merchandise exports grew 4.9 per cent in 4QFY24. The favourable base effect and steady demand from the US, the UAE and the Netherlands helped goods exports grow at the sharpest pace in five quarters. Sequentially, goods exports were at a seven-quarter high of USD120.4 billion in 4QFY24.
On the other hand, merchandise imports grew 2 per cent in 4QFY24. However, sequentially, goods imports were down to $170.7 billion in 4QFY24 from a four-quarter high of $174.4 billion in the previous quarter.
Services demand remained resilient in 4QFY24, as indicated by the latest high frequency indicators and the services trade surplus is seen rising around 6.5 per cent to $38 billion.
Ind-Ra also estimates that merchandise exports will increase 8 per cent on a year-on-year basis to around $112 billion in 1QFY25. This will be the sharpest pace of increase in seven quarters, though partly due to the favourable base effect. Likewise, merchandise imports are expected to be around $169 billion, up 6 per cent. Overall, Ind-Ra expects the goods trade deficit to come in at $57 billion in 1QFY25.
Though the global economic environment continues to be marred by uncertainty, the economic outlook for 2024 has been projected to be better than earlier anticipated. This is on account of the easing inflationary pressures and strong economic growth of the US and various emerging economies. The global manufacturing Purchasing Managers’ Index (PMI) has been in expansion for the three straight months.