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India Ratings and Research (Ind-Ra) in its latest report has said that the country's current account deficit is likely to hit a three-year high of 1.8 per cent or $43.81 billion in FY22, as against a surplus of 0.9 per cent or $23.91 billion in FY21. According to an assessment by India Ratings, the Current Account Deficit (CAD) has moderated to $17.3 billion or 1.96 per cent of GDP in the fourth quarter of FY22 as against $8.2 billion or 1.03 per cent in the year-ago period, and massively down from $23.02 billion or 2.74 per cent in Q3, which was a 13-quarter high.

According to the report, the improvement in the key numbers is due to the remarkable improvement in merchandise exports in FY22 when it grew 42.4 per cent against a negative 7.5 per cent in the pandemic-hit FY121. But, it said exports could face significant headwinds from rising uncertainty and volatility in the global economy primarily because of the spike in commodity prices, especially crude oil after Russia invaded Ukraine and pointed to the lower forecast of global growth by the World Trade Organisation (WTO) which sees the global economy clipping at just about 3 per cent in 2022, down from 4.7 per cent forecast earlier.

On the other hand, it said India's merchandise imports are expected to accelerate on the back of escalated commodity prices and rupee depreciation in FY23. It expects merchandise exports to come in at $112.5 billion, growing by 17.7 per cent in the first quarter of FY23, up 85.7 per cent over the same quarter last fiscal. Merchandise imports grew 44.1 per cent during April-May 2022 to $120.9 billion and are expected to stand at $182.9 billion.