News

Published: Mar 21, 2023
Updated: Mar 21, 2023

India's Economic Growth Holds Steady in February, but Consumption Weakening

India's economy showed signs of steadiness in February, but early signs of weakening consumption emerged amid concerns about future growth prospects and hawkish monetary policy. Bloomberg's "animal spirits" barometer, which tracks eight high-frequency indicators, revealed moderating credit growth, weak tax revenues, and a rising unemployment rate.

Business Activity:

Purchasing managers' surveys showed that activity in India's services sector climbed at the fastest pace in 12 years, while manufacturing activity expanded at a slower pace. The degree of optimism recorded in February was the lowest for seven months, and some companies doubted demand would remain resilient.

Exports fall

India's exports fell by 8.82% in February from a year ago, while imports dropped by 8.21%, indicating softening global and domestic demand.

Consumer Activity: Liquidity tightens ; passenger vehicle sales slow down.

Liquidity in the banking system is tightening, and credit growth moderated. Goods and services tax collections, which help measure consumption in the economy, fell, while new vehicle registrations rose. However, passenger vehicle sales growth slowed down.

Market Sentiment:

Electricity consumption improved, and peak demand rose amid predictions of hotter weather over the coming months. However, India's unemployment rate climbed.

Concerns loom about slowing growth:

India's economic growth held steady in February, but concerns about future growth prospects and hawkish monetary policy could put pressure on economic expansion. With signs of weakening consumption, India needs to focus on restoring consumer confidence and stimulating demand in the economy