India’s Current Account Deficit Moderates in Q2 but May Double in Q3

• India’s current account deficit (CAD) for Q2 2024-25 moderated to $11.2 billion, 1.2% of GDP from $11.3 billion a year ago.

• The Reserve Bank of India (RBI) reported an increase in merchandise trade deficit to $75.3 billion from $64.5 billion in Q2 2023-24.

• Net services receipts rose to $44.5 billion from $39.9 billion a year ago.

• Net foreign direct investment (FDI) outflow in Q2 was $2.2 billion, below expectations.

• Aditi Nayar, chief economist at ICRA, predicts a record-high trade deficit in November could double the deficit to 2.5%-2.7% of GDP in Q2.

• Net inflows from foreign portfolio investments rose to $19.9 billion from $4.9 billion a year ago.