Motilal Oswal: Economic Activity In July 2020 As Bad As In June 2020; Real GDP Could Decline Approximately 5% YoY In Q2 FY21
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Motilal Oswal Report
Our in-house Economic Activity Index (EAI) for India’s real gross value added (called EAI-GVA) contracted 5.6% YoY in July 2020 (similar decrease was witnessed in June 2020) – marking its fifth successive monthly decline.
Farm activities, however, remained strong, while the non-farm sector dropped approxiamtely 7%. Decline in industrial activities was a tad slower, while it was marginally higher for the services sector.
EAI-gross domestic product index (our in-house measure of the official GDP) also contracted 5.9% YoY in July 2020, worse than the 3.3% decline a month ago.
Interestingly, while private consumption and total investments decline was slower (versus the fall in June 2020), muted growth in government consumption and sluggish decline in imports led to faster contraction in EAI-GDP in July 2020.
Excluding government spending, EAI-GDP contracted 8% YoY in July 2020 (versus the 6% decline in June 2020).
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