Manufacturing PMI (Apr.)

The astounding plunge in India’s manufacturing PMI to a record low in April strongly indicates that the nationwide lockdown has caused activity to collapse. Looking ahead, with the shutdown now extended for another two weeks and with hopes of a quick post-virus recovery evaporating, local industry will remain on its knees for a long time.
Darren Aw Asia Economist
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India Economics Weekly

Encouraging signs in state-level virus data

COVID infections have been falling in parts of India over the past week, particularly in those areas that were first to report Omicron waves. We’re hopeful that this is a sign of things to come, and wouldn’t be surprised if India’s third wave had largely subsided by the time the RBI next meets in early February.

21 January 2022

India Economic Outlook

On the cusp of policy tightening

India’s Omicron wave should only be a temporary setback to the economic recovery. As long as recurrent large waves of COVID are avoided, we think that economic growth will be faster this year than last. We also think that inflation will soon start to worry the RBI. Consequently, policy rates will be hiked by more than most anticipate.

19 January 2022

India Economics Weekly

Omicron surging, asset sales progressing

COVID-19 cases in India are still surging. But the early indications are that healthcare systems are not under significant pressure, and we’re hopeful that India’s third wave will peak before long. Even if it doesn’t, the better-than-expected fiscal performance over recent months means that there is policy space for the government to intervene.  

14 January 2022

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India Economics Update

External demand to support economy in Q2

India’s goods trade deficit narrowed to an eight-month low in May as exports held up much better than imports. Strong external demand will help to offset some of the damage to domestic demand caused by the virus surge and ramping up of containment measures this quarter.

16 June 2021

India Data Response

Consumer Prices (May)

India’s consumer price inflation jumped to a six-month high in May on the back of an unexpected surge in core inflation, which we suspect is a result of rising commodity prices now seeping into retail prices. But that should reverse soon enough and in turn pull the headline rate down over the coming months.

14 June 2021

India Data Response

Wholesale Prices (May)

Wholesale price inflation surged to a three-decade high in May on the back of the sharp rise in global commodity prices and will be a concern for policymakers. However, there are reasons to think that WPI inflation has almost peaked, and the weakness of domestic demand means it will be difficult for firms to pass on price increases to consumers.

14 June 2021
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