Nomura’s analysts expect India’s current account deficit (CAD) to narrow to 0.5% of its gross domestic product (GDP) in 2020 versus 1% in 2019, according to Reuters.
A current account deficit (CAD) occurs when the total value of goods and services a country imports exceeds the total value of exports. A consumption-driven and energy-dependent economy like India is bound to run current account deficits. However, a very high CAD often weighs on the Indian rupee.
The CAD could narrow, as expected by Nomura, as coronavirus-induced joblessness is likely to keep consumption and imports low.
While India’s exports are expected to improve, a rapid recovery looks unlikely due to weak global demand, analysts added.
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