Balance of payments- surplus turns to deficit; recovery imminent
Mirroring the financial meltdown, India’s balance of payments data for the third quarter registered an overall deficit of $17.88 billion, the largest in ten years and much above analyst estimates.
By ET Bureau |
MUMBAI: Mirroring the financial meltdown, India���s balance of payments data for the third quarter registered an overall deficit of $17.88 billion, the largest in ten years and much above analyst estimates.
The current account posted a record quarterly deficit at $ 14.6 billion led by a huge merchandise trade deficit of $36 billion for the quarter. The key disconnect between analyst estimates and the official data arose primarily on account of imports for the
quarter, which saw an upward revision by $7.6 billion as compared to monthly data, a huge deviation from the monthly DGCIS data.
���We believe that the difference in import data from the DGCIS monthly series and the RBI quarterly data may in part be attributable to higher defence imports, which do not get captured in the DGCIS data. While the current account has historically posted a net deficit in most years, the shock this time came from the capital account too entering negative territory, for the first time since Q1FY99. However it is pertinent to note that this deficit captures data for a quarter marked by extraordinary events,��� said Yes Bank in a report.
Globally, Oct-Dec ���08 saw huge capital flight as international investors pulled out from emerging markets on de-leveraging and growing risk aversion.
���On a positive note, invisibles have remained fairly resilient and posted $ 21.7 billion for the quarter, a marginal 0.6% increase YoY. However, these along with NRI deposits may be subject to downsides from job losses abroad. The capital account is expected to return to surplus as banking capital picks up and portfolio inflows pickup,��� the report added.
The current account posted a record quarterly deficit at $ 14.6 billion led by a huge merchandise trade deficit of $36 billion for the quarter. The key disconnect between analyst estimates and the official data arose primarily on account of imports for the
quarter, which saw an upward revision by $7.6 billion as compared to monthly data, a huge deviation from the monthly DGCIS data.
���We believe that the difference in import data from the DGCIS monthly series and the RBI quarterly data may in part be attributable to higher defence imports, which do not get captured in the DGCIS data. While the current account has historically posted a net deficit in most years, the shock this time came from the capital account too entering negative territory, for the first time since Q1FY99. However it is pertinent to note that this deficit captures data for a quarter marked by extraordinary events,��� said Yes Bank in a report.
Globally, Oct-Dec ���08 saw huge capital flight as international investors pulled out from emerging markets on de-leveraging and growing risk aversion.
���On a positive note, invisibles have remained fairly resilient and posted $ 21.7 billion for the quarter, a marginal 0.6% increase YoY. However, these along with NRI deposits may be subject to downsides from job losses abroad. The capital account is expected to return to surplus as banking capital picks up and portfolio inflows pickup,��� the report added.
ADVERTISEMENT
According to Yes Bank, India will remain a fairly attractive foreign investment destination as the second largest growing economy. ���Additionally, India scores quite well on a comparison of debt/GDP ratios across emerging markets globally. The worst, we believe, is behind us,��� the report concluded.Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
