Indian economy sails through external risks: UBS

New Delhi: The Indian economy has been in a sweet spot lately, with manageable macro risks, global brokerage, UBS said.“We forecast another year of strong growth for India, at seven per cent in FY25,” it said.

Historically, periods of high growth in India have been associated with widening current account deficit (CAD).

In recent years, CAD has not breached this sustainable range due to additional buffers created in the form of a higher services trade surplus and buoyant remittance flow.India remains vulnerable to high global oil prices (importing 87% of its oil demand).

Measures to boost services and manufacturing exports are necessary to support India’s higher potential GDP growth, UBS said.

India holds the fourth largest FX reserves in the world ($617 billion, as of mid-February 2024), which seems comfortable as a reserve adequacy metric, UBS said.