Iraq crises may widen CAD to 2.3% of GDP: SBI
23/06/2014 00:30
According to a PTI report, SBI Research sees India’s current account deficit (CAD) widening to 2.3 per cent of the country’s gross domestic product (GDP) as the deepening unrest in Iraq raises the risks of shrinking crude supplies from OPEC’s second biggest oil producer, threatening to cause a spike in oil prices.
Given that India depends on imported oil to meet nearly 80 per cent of its oil consumption needs, a surge in oil prices can have an adverse effect on India’s external trade position.
Iraq is India’s second largest supplier of crude oil after Saudi Arabia, accounting for 2 million barrels per day of the country’s inbound crude shipments. In 2013, Iraq accounted for 10.1 per cent of India’s crude oil demand, following the 18.1 per cent from Saudi Arabia.
SBI Research reckons that if oil prices spike to USD 115 per barrel, CAD may widen to above 2 per cent of GDP in FY 2014-15. In FY 2013-14, India’s CAD shrank to 1.7 per cent of GDP from 4.7 per cent in the prior fiscal as gold shipments fell sharply amid government curbs.
“If the Iraqi crisis prolongs and oil price moves up from the present level of US $ 111 per barrel, and the rupee depreciates to 62 per dollar, CAD (Current Account Deficit) would widen to US $ 50.6 billion, or 2.3 per cent of GDP,"
23/06/2014 00:30
According to a PTI report, SBI Research sees India’s current account deficit (CAD) widening to 2.3 per cent of the country’s gross domestic product (GDP) as the deepening unrest in Iraq raises the risks of shrinking crude supplies from OPEC’s second biggest oil producer, threatening to cause a spike in oil prices.
Given that India depends on imported oil to meet nearly 80 per cent of its oil consumption needs, a surge in oil prices can have an adverse effect on India’s external trade position.
Iraq is India’s second largest supplier of crude oil after Saudi Arabia, accounting for 2 million barrels per day of the country’s inbound crude shipments. In 2013, Iraq accounted for 10.1 per cent of India’s crude oil demand, following the 18.1 per cent from Saudi Arabia.
SBI Research reckons that if oil prices spike to USD 115 per barrel, CAD may widen to above 2 per cent of GDP in FY 2014-15. In FY 2013-14, India’s CAD shrank to 1.7 per cent of GDP from 4.7 per cent in the prior fiscal as gold shipments fell sharply amid government curbs.
“If the Iraqi crisis prolongs and oil price moves up from the present level of US $ 111 per barrel, and the rupee depreciates to 62 per dollar, CAD (Current Account Deficit) would widen to US $ 50.6 billion, or 2.3 per cent of GDP,"
