Analysts have projected India’s current account deficit (CAD) for the second quarter to reach nearly a 10- year high on firm oil prices and a weak rupee which has put further pressure on the trade deficit.

The median forecast of 18 economists in a poll conducted by Reuters showed $35.5 billion CAD in Q2, which is 4.3 per cent of India’s GDP. Forecasts ranged from $24.5 billion to $40 billion, or 3.3-4.7 per cent of GDP.

India’s CAD in the April-June quarter, stood at $23.9 billion, which was about 2.8 per cent of GDP. In a separate report, India Ratings said that falling exports and high crude oil prices will push CAD to $36 billion which will be a 37-quarter high or 4.4 per cent of GDP.

CAD in the same period of the previous year stood at $9.7 billion or 1.3 per cent of GDP. Meanwhile, exports in November recorded a flat growth of 0.59 per cent to $31.99 billion even as the trade deficit widened to $23.89 billion, according to the data released by the government.

Imports rose 5.37 per cent to $55.88 billion in November. CAD had peaked at 4.7 per cent of GDP in the first quarter of 2013-14. The highest in absolute terms was in the third quarter of 2012-13 when it touched $31.8 billion.

The India Ratings report said that global headwinds can be gauged from the fact that goods exports tumbled in October 2022 for the first time after February 2021.

The latest high frequency indicators are not encouraging, the rating agency said.

Global manufacturing activity remained in contraction even in November as the Global Purchasing Managers Index decelerated to 48.8 points, the lowest print since June 2020.

The rating agency expects merchandise exports to slip to an eight-quarter low of $88.2 billion in the third quarter of this fiscal, down 17.4 per cent from a year ago.

India Ratings said goods trade deficit will rise to a fresh high of $83.7 billion in the third quarter, which is 38.9 per cent higher than the corresponding period of 2021-22.

The agency pointed out high energy prices could rule out the gains from a fall in global commodity prices, which is expected to lower merchandise imports in the third quarter. But energy prices are at elevated levels: up alomost 19.9 per cent in October and November compared with a year ago.

Moreover, the weaker rupee would add more pressure on CAD. Despite these projections, the RBI is not worried about CAD.

Speaking to the press last week, RBI governor Shaktikanta Das said CAD is “eminently manageable’’.