India’s current account deficit (CAD) is expected to remain manageable despite global trade volatility and export headwinds, according to a report by CareEdge Ratings.
The agency said resilient services exports, steady remittance inflows and controlled import growth are likely to cushion the impact of weaker merchandise exports. While geopolitical uncertainties, slowing global demand and protectionist trends pose risks to exports, India’s external sector fundamentals remain relatively stable.
CareEdge expects the CAD to stay within a comfortable range as a share of GDP in the near term, supported by a strong services trade surplus and moderation in crude oil prices. It added that foreign exchange reserves provide an adequate buffer against external shocks.
However, the report cautioned that a sharp rise in commodity prices or prolonged global slowdown could exert pressure on the external balance, warranting close monitoring.