AMEP index at post-pandemic high amid festive tailwinds

Our Bureau Mumbai | Updated on November 22, 2021

Agency retains FY22 GDP forecast at 10%

Acuité Ratings & Research’s proprietary AMEP (Acuité Macroeconomic Performance) index has touched a new high of 125.2 in October 2021 from a revised 115.7 in September 2021 led by improvement in 14 out of 16 high-frequency indicators.

The credit rating agency assessed that the uptick in the index is primarily driven by the positive traction in indicators such as tractor sales, diesel consumption, passenger freight, and GST collections which have recorded a robust double-digit sequential expansion.

“Clearly, festive and pent-up demand have played a role in pushing up some of these indicators. On the other hand, employment and imports recorded a minor contraction,” the agency said in a statement.

In addition to the above, Acuité underscored that other indicators of retail sales trend also suggested a similar narrative.

GDP forecast

Overall, the agency has retained its forecast for India’s GDP at 10 per cent for FY22 given the expectation of a further ramp up in private consumption demand, continuing export momentum and the continuing fiscal and monetary support.

Acuité noted that India has witnessed healthy progress on its path to economic revival in October 2021 led by significant tapering in Covid infections, near-complete removal of lockdown restrictions, pick up in the pace of vaccination along festive season augmenting pent-up demand.

AMEP index has been constructed deploying 16 high-frequency indicators across four major categories – consumption demand, industrial production, external sector and employment.

Going forward, the agency expects the AMEP index to continue its upward trajectory in H2 (October 2021 till March 2022) FY22 amidst the steady nationwide drop in Covid infections as well as mortalities and importantly, the substantial progress achieved in the rate of vaccination of the adult population. Currently, India has inoculated around 55 per cent of the total population with the first dose while 28 per cent of the population are fully vaccinated.

The agency believes that given the healthy pace of vaccination, they expect India to inoculate around 70 per cent of its population with at least one dose of vaccine before the end of calendar 2021. This is likely to further notch up consumer sentiments.

“However, some near term downside risks could emanate from the global supply chain disruptions, raw material shortages along with elevated commodity prices,” it said. “The risk in the rise of Covid infections still remains a possibility post the festive season, though the economic impact could be much lower on account of vaccine penetration and existing seroprevalence,” Acuité said.

Published on November 22, 2021

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