Economic recovery losing steam

New Delhi: Economic recovery has lost some momentum as pent-up and festive consumption demand dropped in intensity, Acuite Ratings and Research said in a report. Accordingly, there has been a loss in the momentum of economic recovery in November 2021.

"We observed that after the expansion in two consecutive months our proprietary AMEP (Acuite Macroeconomic Performance) index fell to 111 in November from a post-Covid peak of 124.9," Suman Chowdhury, chief analytical officer of Acuite Ratings, said.

"The contraction of the index sequentially by 11.2 per cent MoM in November is partly driven by seasonality. However, the magnitude of deceleration is higher than the average of around 6.5 per cent recorded in the last two years in the month of November."

As per the agency, out of the 16 indicators covered by AMEP index, only five posted a sequential expansion in November, whereas 11 saw a contraction, highlighting a slowdown in the breadth of economic recovery.

"The decline in the index was primarily driven by a weak trend in tractor sales, e-Way bills, auto sales, exports, and power generation," the agency said.

"While inadequate in terms of offsetting the latter weakness, a healthy traction is visible in indicators such as passenger freight, PMI manufacturing, GST collections, employment, and credit growth."

The agency said that the tractor as well as two-wheeler sales, a key harbinger for a recovery in rural demand, recorded a significant contraction amidst excess and unseasonal rains in some pockets of the country along with delayed harvest in Kharif crops, which impeded rural cash accruals and thereby fresh purchases.

(Continued on P2)