[ecis2016.org] The leading economic indicators show early signs of easing amidst the threat of a third wave of the COVID-19 pandemic. However, the impact has been less severe compared to the preceding waves.
The resurgence of the third wave has overshadowed the recovery momentum of the high-frequency indicators in India. In December 2021, the consumer sentiments dampened on account of the Omicron-fueled spike in the COVID-19 cases, which forced several states in India to announce fresh curbs to contain the new variant.
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The manufacturing and services activity registered a minor downtick in their recovery, although they remained in the expansion zone of the above-50 mark. Industrial activities remained subdued for the third consecutive time. The overall slowdown had pushed the unemployment rate to a four-month high in the last month of 2021. Having said that, the impact is far less severe as compared to the previous two COVID-19 pandemic waves. The ongoing vaccination and local restrictive measures instead of nationwide lockdowns have underpinned the business continuity and cushioned the impact of the third wave.
World Bank retains India’s economic forecast despite the third wave
- The World Bank has reiterated India’s gross domestic product (GDP) growth estimate to 8.3 per cent for 2021.
- The agency has projected the Indian economy to grow at 8.7 per cent in 2022, 1.2 per cent higher than its previous estimates.
- It has, however, downgraded the global economic forecast marginally to 4.1 per cent for 2022 from its previous estimate of3 per cent.
- The pairing in outlook comes on the back of supply chain disruptions and disparity in vaccination rates in developed, developing and least developed nation.
Retail inflation hits a 5-month high, WPI inflation eases marginally
- CPI inflation reached 5.59 per cent in December 2021 compared to 4.91 in November 2021.
- While the inflation remains within the RBI’s target band of 2—6 per cent, it is at a five-month high. The rise is being propelled by an unfavourable base and rise in prices for fuel and light, and clothing and footwear.
- The inflation in urban areas was pegged at 5.83 per cent – the highest since July 2021.
- In rural areas, the CPI jumped to 5.36 per cent in December 2021 compared to 4.29 in the previous month.
- The WPI inflation eased marginally to 13.56 per cent in December after an uptick to 14.23 in the preceding month. The wholesale price-based inflation has recorded double-digit growth for the ninth consecutive month.
- The double-digit ascent can be credited to the rise in the price of mineral oils, basic metals, crude petroleum and natural gas, chemicals and chemical products, food products, textile, paper and paper products etc., compared to the same period in 2020.
Manufacturing and services PMI remains in the expansion zone
- The manufacturing Purchasing Managers Index (PMI) reached 55.5 per cent in December 2021, which is marginally lower than the 57.6 per cent documented in the preceding month.
- The expansion is happening due to substantial, although slower, rises in sales and output.
- India Services PMI eased marginally to 55.5 per cent in December 2021 compared to the previous month’s figure of 58.1. Although there was a dip, the Indian Services PMI stayed in the expansion zone for five consecutive months.
- The services activity remained elevated due to an increase in demand, although the outlook is a little obscured due to concerns over the third wave and inflationary pressures.
- According to PMI parlance, a reading above 50 indicates expansion, while below 50 indicates contraction.
Non-food credit accelerated to 7.1 per cent in November
- The non-food credit recorded a growth of 7.1 per cent YoY in November 2021, its fastest since January 2020.
- The improvement is due to an increase in credit being extended to small and medium businesses and personal loans.
- The personal loan sector growth accelerated to 11.6 per cent in November 2021, compared to 9.2 per cent in the same period the previous year, primarily driven by consumer durables and vehicle loans.
- The credit in the housing sector (including the priority sector) eased marginally to 8.0 per cent YoY in November 2021 compared to 8.4 in 2020 during the same.
IIP remains subdued, eases for third consecutive time
- The IIP continued to ease further, recording a muted growth of 1.4 per cent YoY in November 2021, the lowest since March 2021.
- The degrowth can be attributed to the waning low base effect and supply-side bottlenecks with low investments.
- The major sectors under IIP, such as the manufacturing, mining and electric output, recorded degrowth in November 2021, registering a marginal YoY growth of 0.9 per cent, 5 per cent, and 2.1 per cent, respectively.
- The general IIP reached 128.5 in November 2021, surpassing the year-ago level of 126.7.
Unemployment at a four-month high
- India’s unemployment rate,79 per cent, rose to a four-month high in December 2021 after easing in the preceding month.
- The easing of services and manufacturing activity and uncertainty over the third wave have impacted employment. However, the impact has been subdued compared to the previous two waves.
- The unemployment in urban areas rose to 9.30 per cent in December 2021 compared to 8.21 per cent in the previous month.
- In rural areas, the unemployment rate increased to 7.28 per cent in December after easing in the preceding.
Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle
