New Delhi: The country's current account is likely to be in surplus in the first quarter of this financial year, says a Citigroup report.
According to the global financial services major, trade deficit is stabilising at lower levels, and incorporating August trade data, the trends are pointing to a "broadly balanced" current account scenario.
"Following a moderate current account deficit of $0.4 billion or (-) 0.1 per cent of GDP in January-March quarter, we expect current account to come in at a surplus of $2 billion or 0.4 per cent of GDP in April-June quarter," Citigroup said.
India's trade deficit stood at $7.7 billion in August, almost unchanged in the last three months and significantly below the average monthly trade deficit of $9.9 billion last fiscal year.
Imports contracted 14 per cent year-on-year to $29.2 billion in August, while exports were down only 0.3 per cent year-on-year to $21.5 billion.
The report further noted that "incorporating August trade data, the trends are pointing to a broadly balanced current account in the second quarter of this fiscal year (July-September) as well".
India's gold imports stayed subdued at $1.1 billion (down 77 per cent year-on-year) in August similar to the trend seen in last 7 months.
Besides, imports of base metals, ores and minerals also recorded double-digit declines in August. Moreover, among key trading partners, export to the US (largest export destination for India) fell by 1.1 per cent year-on-year in April-July period while imports from China - which is the largest exporter to India - fell by 7.4 per cent year-on-year.
"This could introduce downside risks to our 2016-17 current account deficit estimate of 0.9 per cent of GDP especially if crude price remains soft in the second half," Citigroup said.
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