India's Manufacturing Growth Slows to Five-Year Low, Current Account Deficit at $4.2 Billion
New Delhi: India recorded a current account deficit of $4.2 billion in the previous quarter, a figure larger than the $3.4 billion seen in the same period in the last fiscal year.
Last month its manufacturing sector growth also declined for a third consecutive time to a five-year low, with one survey finding that companies reported facing relatively weak demand conditions.
Earlier this week the Union government announced that the real GDP had grown by 7.8% year-on-year in the last quarter, almost a percentage point higher than the 6.9% figure corresponding to the same time last year. “This has been supported by buoyant domestic demand and gains in manufacturing and services,” it said.
Standing at $4.2 billion – equal to 0.5% of the GDP – in the April-June quarter of the ongoing fiscal year, India's current account deficit had widened slightly compared to the same period last year, when there was a $3.4 billion deficit (0.4% of GDP), the RBI said on Tuesday (September 1) in a compilation of provisional figures.
A large chunk of this was accounted for by the merchandise trade goods deficit, which in the past quarter stood at $86.1 billion. During the same time last year it was $68.9 billion wide, per a partially revised estimate.
Net services receipts were higher by $3.7 billion in the first quarter of this fiscal at $51.6 billion. Exports in computer services, other business services and transportation services had risen over the year, the RBI said.
As for the financial account, foreign direct investment saw net inflows of $6.1 billion in the last quarter, higher than the $5.2 billion inflows seen last year. On the other hand, foreign portfolio investment recorded a net outflow of $9.6 billion this year as compared to a net inflow of $1.6 billion last year.
Manufacturing growth slows to five-year low
In August India's manufacturing growth slid for the third consecutive month, with expansion in output as well as new orders slowing to five-year lows, according to the HSBC India Manufacturing Purchasing Managers' Index (PMI) compiled by S&P Global.
This past month the PMI declined to 52.8 from July's 53.5 – both lower than the long-run average of 54.2.
“Firms reported softer demand conditions, which subsequently led to weaker increases in buying levels and stocks, as well as a mild decline in employment,” per the survey, which noted that the fall in employment occurred for the first time in two-and-a-half years.
Input cost pressures, however, continued to soften in August, prompting companies to limit their price hikes.
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