Manufacturing PMI (Jul.)

The sharp rebound in India’s manufacturing PMI in July adds to evidence that the economy has been staging a strong recovery ever since the second virus wave receded. But with vaccine coverage still low, sustained improvements are far from guaranteed.  
Darren Aw Asia Economist
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India Economics Weekly

Domestic needs limit prospects for vaccine exports

India is planning to resume exporting COVID-19 vaccines from October, which should help to further boost the trade position. But with vaccination coverage still low, the domestic vaccine rollout will continue to take priority. Vaccine shipments from India therefore won’t be enough to shift the needle for rollouts in other poor EMs.

24 September 2021

India Chart Book

Global index inclusion would marginally boost bonds

Speculation is building that India will be included in major global bond indices over the next year or so. If that happens, it would highlight the local bond market’s growing maturity and be cast as a coup by the government, for which bond index inclusion has long been a stated policy aim. With vast amounts of assets tracking global indices, this would leave scope for a rise in portfolio inflows. To be clear, with India’s weighting in any global index likely to be small and increased only gradually, the impact is more likely to be marginal than transformational. Nevertheless, bond index inclusion would still bolster our view that, supported by a commitment from the RBI to keep policy very accommodative, Indian bond yields should only rise very slightly over the next 18 months even in an environment of higher US Treasury yields.   Drop-In: Evergrande – What are the risks to China and the world? Chief Asia Economist Mark Williams and Senior China Economist Julian Evans-Pritchard will be joined by Senior Markets Economist Oliver Jones to take your questions about the Evergrande situation. They’ll be covering the implications of collapse for China’s financial system and growth outlook, and assessing the global markets fallout. Register here for the 0900 BST/1600 HKT session on Thursday, 23rd September.

22 September 2021

India Economics Focus

A dive into the National Infrastructure Pipeline

The Indian government’s aim to significantly ramp up infrastructure investment through its flagship National Infrastructure Pipeline (NIP) has suffered less disruption than might have been expected during the pandemic. That is a positive for long-term growth prospects. But significant headwinds – including the weakness of the banking sector and land acquisition constraints – will prevent the NIP from having a transformational impact on the Indian economy.

20 September 2021

More from Darren Aw

India Data Response

Core Infrastructure Industries (Jun.)

India’s core infrastructure industries index rebounded in seasonally-adjusted m/m terms in June, suggesting that an industrial recovery is well underway.

30 July 2021

India Chart Book

Inflation has now peaked

Amid the ongoing debate over inflation in a post-pandemic world, one thing that does appear clear is that near-term price pressures in India have peaked. Consumer price inflation held steady in June at 6.3% y/y, while wholesale price inflation dropped for the first time since December. Daily data show that, despite concerns in some states over lower-than-expected monsoon rains, food price inflation has eased further so far in July. And with last year’s rebound in global oil prices now entering the annual comparison, vehicle fuel inflation – which unusually is included in the RBI’s core measure of inflation – is likely to have dropped too. If we are right in thinking that inflation has peaked, the RBI is unlikely to withdraw policy support for a long while yet as it remains firmly focussed on supporting the economic recovery.

21 July 2021

India Economics Update

Wider trade deficit won’t threaten external position

The widening in India’s goods trade deficit in June came on the back of a rebound in imports amid the lifting of containment measures and the recent rally in global oil prices. But while the economic recovery has further to run, we think that oil prices will soon peak, which should help to limit external risks.

16 July 2021
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