Indian economy account deficit becomes thinner at 1.3 percent

Here is good news for all the indian,s - India's current account deficit this fiscal is likely to narrow down to 1.3 per cent of GDP as the trade gap shrinks and FDI inflows pick up on the back of positive election mandate.

In 2008-09, the current account deficit was 2.6 per cent of the country's gross domestic product (GDP) at $29.8 billion, against $17 billion a year ago.

Goldman Sachs said the deficit is lower than their expectation of 3.5 per cent, mainly due to rapid fall in imports in the January-March quarter of 2008-09.

The firm also said that domestic demand and its expectations of the output gap closing rapidly, are likely to support a strengthening rupee.