Nomura Index Signals Return To Pre-Pandemic Levels
An index of concurrent indicators is suggesting that activity levels are moving back towards pre-pandemic levels. This, however, may not directly imply that demand or output is back to where it was when the Covid-19 pandemic hit ashore in March 2020.
The Nomura India Business Resumption Index rose above 100 for the first time since the pandemic began for the week ended Aug. 15, 2021.
Google mobility indicators improved, rising 1.7 percentage points in movement across workplaces. Mobility across retail and recreation improved 3.4 percentage points.
Power demand rose 5.7% on a week-on-week seasonally adjusted basis.
The labour participation rate, however, eased to 40.4% from 41.5%.
The recovery from the second wave has been very swift: it took the Nomura India Business Resumption Index nearly 10 months to crawl back towards the 100 mark after the first wave of Covid-19, but less than three months to cross 100 after the second wave. This supports our more positive growth outlook.Nomura Global Market Research
While the link between indicators such as mobility and GDP growth is tenuous, the signs of pick-up across indicators such as power and e-way bills do point to improving economic conditions.
"We expect Q2 (April-June) GDP growth (data due Aug. 31) to contract sequentially (-4.3% quarter-on-quarter, seasonally adjusted), but rise 29.4% year-on-year," said Nomura, adding that the July-August quarter may see a strong sequential rebound. "To be sure, the economy is not yet out of the pandemic woods, but current dynamics support our above-consensus GDP forecast of 10.4% year-on-year in FY22 (year ending March 2022)."