The steady progress in vaccination and the improvement in consumer sentiments have also been supported by the relative resilience of the industrial sector, a gradual rebound in services sector with improved mobility, buoyancy in exports and improved government capital expenditure, the domestic rating agency said.

The revival in economic activity is also corroborated by the rating agency’s proprietary Acuité Macroeconomic Performance (AMEP) index, which recorded a sequential expansion of 7.2 per cent quarter on quarter (QoQ) in Q2 FY22 from a contraction of 9.3 per cent in Q1 FY22.

The uptick in the sequential print was mainly driven by a pick-up in industrial activity, particularly manufacturing, passenger traffic, exports and few consumption indicators like -way bills, goods and services tax collection, auto sales and petrol consumption.

The company expects sequential GDP and GVA print to record a significant expansion in Q2 FY22 from a contraction of 16.9 per cent in Q1 FY22. Growth momentum in October this year, as also highlighted in our AMEP index, saw considerable upside with most high frequency indicators recovering above their prepandemic levels.

In first half of November, the rating agency, however, noticed some slowdown in incremental economic activity, which it attributed to seasonality on account of Diwali holidays.

Global inflation appears to be more prolonged in nature than earlier expected and that may translate into a faster normalisation of monetary policies in some developed economies, reflecting in heightened financial market volatility, and thereby, clouding a stronger growth outlook, the company added.

Fibre2Fashion News Desk (DS)