Stock Market Tips - CAD to remain manageable at 1.2% of GDP in FY18

India has become less vulnerable to external risks and its current account deficit (CAD) is expected to remain manageable at 1.2 per cent of GDP this fiscal, says a UBS report according to the PTI. According to the global financial services major, though India remains vulnerable in its external position, risks have reduced over the past five years. "India's current account deficit (CAD) has narrowed from a peak of 4.8 per cent of GDP in 2012-13 to 0.7 per cent in 2016-17 due to the positive terms of trade shocks and policy initiatives, and we expect it to remain contained over the next 2 years," UBS said in a research note.

UBS expects CAD to remain manageable at 1.2 per cent of GDP in 2017-18 and 1.4 per cent in 2018-19. The bulk of the narrowing in CAD over the past five years has been largely led by lower oil imports and drop in gold imports, the report said. Due to the lower global crude oil prices (which more than halved in the past five years) and the government's oil sector reform, net oil imports have slowed from a peak of USD 103 billion (5.6 per cent of GDP) in 2012-13 to USD 56 billion (2.5 per cent of GDP) in 2016-17.

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