According to a Reuters poll, India’s current account balance turned positive in the January-March period. This marked the first quarterly surplus in nearly two years, mainly due to a narrower trade deficit and an increase in services exports.
The Reuters poll surveyed 13 economists and projected a current account surplus of $1.9 billion, or 0.2% of GDP, in the first quarter of 2023. In comparison, the fourth quarter of 2022 had a deficit of $2.7 billion, or 0.3% of GDP.
The narrowing trade deficit can be attributed to decreased imports of gold and crude oil, along with increased exports of engineering goods and pharmaceuticals. Services exports, particularly IT and software services, were also expected to show strong growth in the first quarter.
This current account surplus is seen as a positive development for the Indian economy. It indicates that the country is generating more foreign exchange than it is spending, which can help bolster reserves and support the rupee.
However, it is worth noting that this surplus may be temporary. As the global economy is expected to slow down in the coming quarters, demand for Indian exports could decline, potentially widening the trade deficit.
In summary, while the current account surplus is a positive sign for the Indian economy, it is important to closely monitor the situation as the global economic landscape evolves.
