India: COVID-19 hurts the Industrial Production – UOB

Economist at UOB Group Barnabas Gan assessed the latest Industrial Production figures in India.

Key Quotes

“India’s industrial production fell 16.7% y/y in March 2020, dragged by the dismal performance in the capital goods, consumer durables, and construction materials. This marks the first contraction since October 2019.”

“This pallid production data in March was previously reflected in India’s core industries performance (-6.5% y/y) in the same month. Back then, 7 out of 8 industries contracted in March, reflecting the economic headwinds as COVID-19 concerns intensified.”

“Our base case scenario is for COVID-19 concerns to gradually dissipate into the end of 2020, and for the lockdown to be progressively lifted. Should our assumptions come to pass, India’s industrial production is expected to contract by 4.0% for the new FY2020/21 (April 2020 – March 2021), down from the 0.7% fall in FY2019/2020. This should bring GDP to grow at our recently downgraded outlook of a mere 2.0% over the same period.”