In a report, the pace of economic revival crucially depends on how quickly the health concerns abate, economic activities restart, and the psychological impact of COVID-19 subsides. According to the report of Dun & Bradstreet’s Economy Forecast, demand will only materialise once the economic activity gathers momentum. Arun Singh, Global Chief Economist, Dun & Bradstreet, said that while an increase in the e-commerce activity indicates some tentative revival in pent-up demand, the expected decline in investment activity can be a drag on growth.
On the basis of the strict lockdown measures, it is predicted that Q1 -2021 GDP progress is highly impacted. He added that the efforts taken by the government to generate employment in order to support demand through its emphasis on ‘localisation of products’ and infrastructure building along with other improvements will yield results only over the coming year.
As per the report, an increase in the e-commerce activity indicated that manufacturers have increased their production activity, although the manufacturing index under Index of Industrial Production (IIP) is predicted to post a negative growth over the coming two months at least, i.e. till September.
The festival-related demand might pose some buoyancy to the industrial activity from October 2020, although the magnitude will remain the same as a lower rate, as compared to the last year. During July 2020, Dun & Bradstreet expects IIP to have fallen by (-) 10.5 per cent to (-) 11.5 per cent. According to Singh, he said the extent of COVID-19 spread has been much worse than earlier anticipated. Due to the pandemic, it negatively affects the entire economy so this affects economic activities too. He added that government finances remain constrained. The defaults and bankruptcies in the private sector are yet to unravel.
July-Sept 2020 touched an all-time low for Dun & Bradstreet’s Business Optimism Index. Also, the Consumer Confidence Index had dipped to an all-time low in July for Reserve Bank of India. The third quarter of fiscal 2021 will also be impacted as expected to an extent by the subdued festival-related demand.
