The Indian economy began regaining momentum in June, ultra-high frequency data indicate, though subdued consumer sentiment is expected to limit the pace of recovery in Asia’s third largest economy. This comes as states gradually ease curbs on business activity, keeping in mind the decline in the number of fresh Covid cases.
The week ended June 13 was at least the third consecutive week in which economic activity sequentially gained momentum, according to three data trackers by research agencies using a range of data available on daily or weekly basis.
The UBS-India Activity Indicator moved higher for the third consecutive week ended 13 June, after hitting a trough in the week ended May 23. This is corroborated by the QuantEco Research’s Daily Activity and Recovery Tracker (DART) index, which indicates a fourth consecutive weekly expansion in economic activity for the week ended June 13. The Nomura India Business Resumption Index also jumped in the same week, rising for the third consecutive week led by a strong revival in mobility indicators and higher power demand, after slipping to its lowest in almost a year in the week ended May 23.
Mobility indicators such as Google mobility indices, the Apple Driving Index, and daily railway passenger revenues have all shown strong revival in June. E-way bills and imports for the first fortnight of June also showed strong growth, highlighting the gradual resumption of economic activity.
“We expect a sequential pickup in economic activity from June. Unlike the V-shaped recovery in 2020, we expect India to have only a gradual recovery, as consumer sentiment remains weak. That said, we expect the economic recovery to gain momentum from 2H FY22 as consumer and business confidence improve, along with the vaccination ramp-up and control of the pandemic,” said Tanvee Gupta Jain, an economist at UBS.