India Braces for Current Account Deficit Surge Amid Oil Price Hike

As global crude prices ascend, India's current account deficit (CAD) for the fiscal year 2025 confronts escalating challenges. Union Bank of India reports that every USD 10 increase per barrel in oil prices could exacerbate the annual CAD by approximately USD 15 billion.

Despite retaining its CAD forecast at 0.9% of GDP for FY25, the bank has highlighted potential risks stemming from commodity price elevations, with projections indicating a potential widening to 1.2% of GDP in FY26.

The bank cited that global commodity prices, particularly crude oil and metals, will play a crucial role in shaping India's trade deficit outlook. Meanwhile, a strong services trade surplus offers some relief, as geopolitical factors remain a critical variable.

(With inputs from agencies.)