Economic activity up on pent-up demand: Icra
Published On: Wednesday, November 25, 2020 | By: Team KnowMyStock
The acceleration in economic activity in October is the result of pent-up demand and may not sustain going ahead, domestic rating agency Icra said yesterday(24th Nov.2020). Multiple fast-paced indicators, including GST collections, have been showing a sharp recovery since October, which has also led many analysts to revise their overall GDP forecasts for the fiscal. "We caution that the spikes in production seen in the various sectors in October 2020 are an exaggeration of the true recovery on the ground, as they have been driven by a large component of pent-up demand that may not sustain after the festive period is over," the agency's report.
The factors which remain to be watched are the pace of government spending in the second half of the fiscal, after the unexpected contraction recorded in the September quarter, the report said.
according to the report the potential re-imposition of restrictions in one or more states on account of a fresh surge in CVID-19 infections, may temper the momentum of recovery in the coming months, she warned.
The agency said that available trends for early November are suggesting some moderation in these spikes in the ongoing month.
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