Signs of recovery in economic activity in 12 weeks: Research agency

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Just at the time of the Centre announcing a better-than-expected 7.3% contraction of the economy in Covid-scarred FY21, research agency QuantEco has stated that it has detected “the first material uptick in 12 weeks for the week ending May 30, 2021”.

Weekly tracker

In its weekly report of June 1, the agency has stated that its DART (Daily Activity and Recovery Tracker) index has gone up by 4.8% on a week-on-week basis.

A week ago, the agency had said that the decline in economic activity was flattening out.

After 11 weeks

Thanks to the second surge of Covid-19 and the attendant restrictions, the contraction was noticed for 11 consecutive weeks since March 7. However, in its June 1 report, QuantEco has said that it revised last week’s change from (-)0.1% to (+)0.9%. Even with that correction, the contraction was witnessed for 10 weeks at a stretch.

Increasing mobility

In the week ending May 30, improvement was led primarily by mobility indicators (across Google community locations, Apple driving trends and Traffic congestion) and railway passenger movement, said the report.

The continued moderation in COVID cases at an all-India level seemed to trigger people to undertake essential travel. Electricity generation, too, saw a marginal pick up.

“The DART index indicates that normalisation in economic activity may be well underway by the end of Q1. Looking ahead, we remain confident that as the current wave fades and vaccinations pick up, sequential growth recovery could look better Q3 onwards amidst tailwinds from global growth recovery and supportive fiscal and monetary policies,” said the report.

Unemployment

However, rising unemployment levels, especially the urban unemployment levels remained a big concern.

The unemployment data put out by the Centre for Monitoring Indian Economy (CMIE) is displaying a steadily rising rate. The 30-day moving average of unemployment rate has steadily moved up from 7.83 on May 7 to 11.83 on May 30. While the urban unemployment rate has hit 14.6%, that in the rural sector is 10.59%.

Q1 early estimates

Significantly, State Bank of India and Barclays have come out with projected nominal GDP losses for the first quarter of FY22. While SBI Research report pegged it at Rs 6 lakh crore, Barclays put it at Rs 5.4 lakh crore.

In comparison, the loss of GDP to the first wave of Covid in Q1 of FY21 was Rs 11 lakh crore, the SBI Research report mentioned.

The real loss to GDP in Q1 might be Rs 4-4.5 lakh crore, SBI said.