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Weekly Economic Update

Srinivasa Sharan
/ Categories: Mindshare, Edaily
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Weekly Economic Update

In the local economic news, while India’s wholesale price index rose 7.39 per cent in March to an 8-year high, retail-level inflation also moved higher during the month with a YoY increase of 5.52 per cent.  

The reading was up from 5.02 per cent in February and represents a four-month high. Most importantly, the core inflation, which excludes the effects of volatile food & fuel prices increased to 6 per cent that represents the higher end of the inflation targeting bank that RBI has as its policy. While some economists believe that inflation may decline in April due to the effects of a higher base a year ago, most expect pricing pressures to increase for the rest of the quarter.  

On the trade front, India’s exports declined by 6.6 per cent during FY21 even as March exports grew over 60 per cent from a year ago, pointing to a resumption in global trade in the months ahead. Exports for FY20 were at US$ 493 billion while the trade deficit plummeted to US$ 12.74 billion for the year compared to US$ 77.76 billion, a year ago. On the other hand, industrial production in the country declined 3.6 per cent from a year ago, led by a 3.7 per cent contraction in manufacturing and a 5.5 per cent contraction in the mining sector.   

China’s economy grew at its fastest pace since quarterly record-keeping began in 1992. Growth during the quarter was at 18.3 per cent compared to a contraction of 6.8 per cent, a year ago (impacted due to COVID-related lockdowns).  Growth was below consensus expectations of 19 per cent. In other news releases, industrial production/IIP continued its growth momentum with a reading of 14 per cent year over year growth. Retail sales also grew an impressive 32 per cent from a year ago.   

In the US, the economy continued to strengthen on the back of improving economic data. Retail sales expanded 9.8 per cent in March, well ahead of economist expectations of an increase of 6.1 per cent. The additional US$ 1,400 in stimulus checks had the effect of lifting retail sales during the month. In other news, first-time unemployment insurance claims declined to 5.76 lakh in March, the lowest since the COVID crisis began.   

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