It highlighted weak demand due to higher inflation and pandemic scarring as the underlying recovery remains uneven with sluggish services and consumption even prior to the third wave.
NIBRI has risen to almost 23 percentage points (pp) above pre-pandemic levels and around 21pp above the third wave nadir.
Google workplace and retail & recreation mobility rose by 1.4pp and 6 pp, respectively, from the prior week, near record highs. The Apple driving index rose by 11.3pp, the labour participation rate was stable at 40.1%, and power demand rose by 0.4% week-on-week after a 1.5% fall, it said.
Conventional monthly data until January suggest the third wave had a mild impact on demand, while the supply side remained unscathed.
“This imbalance should correct in February,” Nomura said, adding that this is evidenced by the rapid rise across indicators – NIBRI, railway passenger and freight revenues, flight departures and stable GST E-way bills.
As per Nomura’s weekly report, while the third wave appears to be over, growth concerns are not.
“However, the underlying recovery remains uneven, with services and consumption sectors sluggish, even prior to the third wave,” Nomura said.
This reflects weak rural demand due to higher inflation and pandemic scarring, while industrial segments face supply-side constraints, according to the report.
“Still, with higher public capex, services normalisation and easy financial conditions as near-term tailwinds, we expect GDP growth of 8.7% in FY22 and 7.8% in FY23,” Nomura said.
