Lockdown impact: $20 billion current account surplus in FY21
Published On: Tuesday, May 19, 2020 | By: Team KnowMyStock
India may end the current fiscal with a record surplus of about USD 20 billion or 70 bps of the GDP, as imports continue to plunge due to the coronavirus-driven disruptions globally, says a report. The country has been perennially struggling with huge current account deficits. The last time the country had a current account surplus was in the first quarter of 2006-07, again due to the cheaper crude, according to an analysis by Barclays on 19th May. In fact, the Exim trade has been balancing through 2019 due to the worsening growth momentum.
Following the nationwide lockdown since March 25,both exports and imports plummeted to all-time lows in April.
In fact, the steadily slowing economy has ensured that imports are also falling along with exports, leading to improvements in external position since the first half of FY19, with the current account deficit narrowing to USD 27 billion in FY2019 from USD 66 billion in FY2018, driven largely by a smaller trade deficit.
Explaining the 'unwelcome surplus' the report says it is an unwelcome development as the surplus will be driven almost entirely by the lockdown of the economy to contain the pandemic outbreak, and helped by the plunge in crude prices and not by excess exports earnings over imports.
Tags: Exim trade Barclays
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