CAD outlook: Report predicts deficit to nearly double in FY26; projected at 1.2% of GDP

Union Bank of India projects India’s current account deficit (CAD) may nearly double to 1.2% of GDP in FY26 due to rising trade and geopolitical tensions. A widened merchandise trade deficit and the recent US tariff hikes on key sectors are major concerns. Resilient services exports and remittances offer some support, but persistent trade tensions pose a downside risk.