Indian economy's animal spirits soar
Published On: Wednesday, October 28, 2020 | By: Team KnowMyStock
The economy in India picked up speed in September as a revival in demand and business activity helped drive the nation toward recovery from the pandemic-induced slump. Five of the eight high-frequency indicators, including exports, tracked by Bloomberg News improved last month, while three were steady. That helped move the needle on a dial measuring the so-called ‘Animal Spirits’ to 5 from 4 in August -- a level arrived at by using the three-month weighted average to smooth out volatility in the single-month readings. Economists, including those at the Reserve Bank of India, attributed the recovery to pent-up demand after a strict lockdown imposed in March to contain the coronavirus outbreak hit the consumption of goods and services. While inventory re-stocking will underpin business activity in the coming months, the improvement might still not be enough to prevent Asia’s third-largest economy from contracting in the financial year to March 2021.
Activity in India’s dominant services sector continued to recover, with the main index rising to 49.8 in September from 41.8 in August. While that’s a marked improvement from April’s record low of 5.4, a number below 50 suggests it’s still in contraction territory.
Exports returned to positive territory with shipments rising 6% in September from a year earlier. Farm exports and shipments of drugs and pharmaceuticals helped the recovery, with engineering goods and chemicals also adding to the rise. A contraction in imports moderated, resulting in a narrowing of the trade deficit.
Industrial production fell 8% in August from a year earlier, shallower than July’s revised 10.8% contraction. Capital goods output -- another key indicator of demand in the economy -- dropped 15.8% from a year earlier, although that’s milder than the 22.8% drop seen a month earlier.
We are on Telegram!
JOIN our telegram channel to receive updates on Financial News and Stock and FNO Tips.
Click Here!
Follow Us On:
