India: Industrial Production recovery looks unlikely in 2020 – UOB

Economist at UOB Group Barnabas Gan reviewed the performance of the industrial sector in the Indian economy.

Key Quotes

“India’s industrial production fell 16.6% y/y in June 2020, clocking four straight months of contraction. Accounting for the latest print, India’s 1QFY20/21 industrial production fell 35.9% y/y, down from +3.0% y/y in the same period last year.”

“The fall in industrial production was dragged by the sustained plunge in India’s core industries performance (-15.0% y/y) in June.”

“Nonetheless, the pace of contraction has eased substantially from April’s decline of 57.6%, suggesting that manufacturing momentum has gradually improved after India exited from its nationwide lockdown on 20th April 2020.”

“There remains a high degree of uncertainty surrounding the COVID-19 pandemic and its impact on global growth. Due to the evolving COVID-19 situation worldwide, India’s external environment and manufacturing momentum may stay in contraction zone at least till the end of 2020. We downgrade our forecast for India’s industrial production to contract by 15.0% in FY2020/21, down from our prior outlook of -4.0%.”