Friday, March 14, 2014

Mr.Finance Minister: Blame it on Gold imports
A significant factor that aided the narrowing of CAD is the economic slowdown in the country. Contraction in demand for goods and services meant under-utilisation of existing capacities.

Contraction in import of these five items translated into savings of $10.5 billion in foreign exchange outflow – almost three-quarters as much as savings on gold imports.

It must be pointed out that revival of exports, growing at a modest 5.5%, also eased some pressures on the trade deficit, making CAD look prettier.

However, the narrowing of CAD can get reversed if businesses start investing again and consumer demand rejuvenates in the next few months even if much of the curbs on gold imports stay

Courtesy: Tina Edwin, in