Standard and Poor’s cautioned that large deficit economies including India could face more economic problems in the near term. “The road may be rocky in the near term, particularly for the largest deficit countries — India and Indonesia — but we don’t think this is the Asian crisis all over again,” said S&P report titled ‘South And Southeast Asian Economies Grapple With Growth And External Financing Risks’.
Observing that in normal times the countries with high Current Account Deficit (CAD) and high savings might not find it difficult to borrow in the international market, it said, “when markets become risk averse, economies with current account deficits (CADs) often find themselves facing external financing pressure”. India’s CAD rose to an all time high of $88.2 billion or 4.8% of the GDP in 2012-13. For the current fiscal, the government plans to bring it down to $70 billion or 3.7% of GDP. High CAD is impacting the value of rupee, which slipped to an all time low of 68.75 to a dollar in the intra-day trade. The S&P said domestically driven economies like China, India, Indonesia face lower growth risks than trade dependent nations like Singapore.
Observing that in normal times the countries with high Current Account Deficit (CAD) and high savings might not find it difficult to borrow in the international market, it said, “when markets become risk averse, economies with current account deficits (CADs) often find themselves facing external financing pressure”. India’s CAD rose to an all time high of $88.2 billion or 4.8% of the GDP in 2012-13. For the current fiscal, the government plans to bring it down to $70 billion or 3.7% of GDP. High CAD is impacting the value of rupee, which slipped to an all time low of 68.75 to a dollar in the intra-day trade. The S&P said domestically driven economies like China, India, Indonesia face lower growth risks than trade dependent nations like Singapore.
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