Trinh D. Nguyen (Natixis) | India’s nominal GDP rose to $3.5 trillion by 2022, raising its global share by one percentage point to 3.5% and GDP per capita by 64% to 2,500 in the past decade. But diverging from its past, the current account deficit (CAD) narrowed from -3.5% of GDP to -1%, on average. The Indian economy grew more than expected, pushed by higher government infrastructure spending and household consumption. A narrower CAD has made India much more resilient to external shocks. While positive, it also reflects Indian corporates’ deleveraging and weakened investment but with a clear silver lining, namely the more efficient capital allocation. In this report, we analyze the drivers of India’s improved current account balance and assess where it is headed as investment broadens.
The current account (CA) balance is an income statement of net trade (merchandise and…
