Weekly Economic Update
In the local economic news, the last quarter of FY20-21 ended on a positive note for the automotive sector. The auto industry registered sales of 3.2 lakh units, a 128 per cent increase from a year-ago period when it had sold 1.4 lakh units. Interestingly, the sector also registered a 3.9 per cent month-on-month increase from February to March. Market leader Maruti performed well as it delivered a YoY growth of 91.8 per cent to 1.46 lakh units for the month. Tata Motors, the third-largest auto manufacturer reported a 4x increase in auto sales for the month of March, compared to a year ago. Mahindra & Mahindra also experienced a 4x increase in sales to 16,643 units for the month. The month of April is likely to exhibit a slowdown in sales due to the partial lockdowns in place across a few regions of the country. The April price increase is also likely to impact sales during the month.
In other news, the increase in the second COVID wave-related restrictions has led some forecasters to reduce their growth estimates. Rating company, ICRA had earlier expected growth from a year ago to be 27 per cent during April to June quarter because of a lower base but now, expects growth to be in the range of 20 to 25 per cent during the quarter, owing to the localised lockdowns in place. For the entire year, ICRA has reduced its growth forecast to a range of 10 to 10.5 per cent growth from 10 to 11 per cent forecasted earlier while research firm Nomura has trimmed its forecast for the calendar year to 11.5 per cent from an earlier forecast of 12.4 per cent.
In the US, the economy is expected to continue its growth momentum during 2021. The Conference Board’s Index of leading economic indicators increased 1.3 per cent in March with all 10 components staying in the positive zone. The research firm expects growth to be at 6 per cent for the year as consumers increase their spending with the decline in COVID cases.