Business activity goes past pre-covid level
The Nomura India Business Resumption Index (Nibri) has crossed the psychological threshold of 100 for the first time since the 68-day-long lockdown imposed on March 25, 2020, disrupted economic activity. Nibri was at 101.2 in the week ending August 15, a Nomura Global Markets Research release said. A Nibri value of 100 refers to pre-pandemic levels of economic activity.
The Nibri comprises Google mobility indices, driving mobility from Apple, power demand and the labour force participation rate.
The Nibri series considers February 23, 2020 as the base for all the series and subsequent data entries have been indexed to it.
Nibri’s trajectory has been very different during the first and second wave of Covid-19 infections in the country.
It had started falling even before the imposition of the March 25 lockdown in 2020— Nibri was at 82.9 in the week ending March 22, 2020— crashed to an all-time low of 44 in the week ending April 26, 2020; and then recovered gradually to reach 99.3 in the week ending February 21, 2021.
A surge in infections, which ultimately culminated in a far more severe second wave of Covid-19 infections, triggered a sharp fall in Nibri again. It fell to 60.3 in the week ending May 23.
The second wave of Covid-19 infections peaked on May 9, is the seven-day average of daily new cases is taken as the benchmark. However, as infections came down and restrictions were eased, Nibri has made a V-shaped recovery, gaining 40.9 points in just 12 weeks.
“This (V-shaped recovery in Nibri) supports our more positive growth outlook. We expect Q2 (April-june) GDP growth (data due August 31) to contract sequentially (-4.3% q-o-q, sa), but rise 29.4% y-o-y, above both the consensus (19%, as per Bloomberg) and Reserve Bank of India expectations (21.4%)”, Nomura economists Sonal Varma and Aurodeep Nandi said in a note. “Moreover, the continued rise in Nibri during July-august suggests a strong sequential rebound is likely in Q3. To be sure, the economy is not yet out of the pandemic woods, but current dynamics support our above-consensus GDP forecast of 10.4% y-o-y in FY22 (year ending March 2022)” the note added.
During the week under review, Google mobility indicators continued their uptick with the workplace and retail and recreation index rising by 1.7 percentage points (pp) and 3.4 pp, respectively