Economy picking up, show key indicators
Quarterly earnings and latest economic, jobs data show growth is rebounding after prolonged lockdown curbs lifted
nMUMBAI/NEWDELHI: Early signs of a recovery are emerging from quarterly earnings reports and the latest economic and jobs data as businesses crank up production following the easing of the prolonged coronavirus-related lockdown.
Manufacturing activity, although hamstrung by intermittent lockdowns, is also showing a rebound in June and July from a deep contraction in April and May. But analysts warned the initial gains could be undone if the spike in coronavirus cases leads to more lockdowns.
The IHS Markit Purchasing Managers’ surveys for India showed that economic momentum improved in June, reflecting the easing of lockdown curbs during May and June.
“The Indian economy will rebound as the impact of the pandemic recedes, with improving economic growth momentum in the second half of 2020 and positive GDP growth of 6.7% in FY22,” said Rajiv Biswas, Asia Pacific chief economist at IHS Markit.
As the economic indicators show signs of revival, it’s also becoming clear that a full recovery will certainly hinge on finding a vaccine for Covid-19. Without a vaccine, consumers are unlikely to freely venture outside; depressing demand for a vast range of products and services, including travel, hospitality and apparel.
With several vaccine candidates showing promising results in human trials, including that of Oxford and Moderna, and new treatments helping patients recover faster, more people are likely to overcome their fears soon. IHS Markit said on Thursday that India’s medium-term economic outlook remains favourable despite a projected economic contraction in FY21. The company has projected GDP to contract by 6.3% in the year.
“An important positive factor for India is its large and fast-growing middle class, which is helping to drive consumer spending. Total Indian consumer spending is forecast to grow by 42% between 2020 and 2025, measured in dollar terms at constant prices,” the data analytics firm said in a statement.
India’s consumption expenditure will double from $1.6 lakh crore in 2020 to $3.2 lakh crore by 2030, measured in constant prices, boosted by strong average annual GDP growth and rapidly rising per capita incomes for the country’s fast-growing middle-class urban households, the company said.