Macroeconomic Dashboard Key Points:
- The overall banking credit growth continue to be anemic and the retail growth has yet to pick up. Despite lower deposit rates, deposit growth at ~12%YoY was the highest since May 2017, and as a result, system loan to deposit ratio plunged to 71.8% vs long period average of 74.3%.
- September Manufacturing PMI accelerated to 56.8 vs 52.0 in August to reach the highest in over eight years. Services PMI also saw significant improvement at 49.8 Vs 41.8 in August. Steel production continue to improve given the improved exports and demand recovery in domestic markets whilst cement demand was subdued from higher monsoons.
Both urban and rural unemployment has improved to above pre-covid levels. Rural India has been relatively less impacted by the lockdown and has been the silver lining. Two wheeler growth is supported by both rural and urban demand. Some element of channel restocking ahead of festive season is also likely to have helped. Tractor sales continue its healthy growth.
India’s merchandise trade depict that exports turned positive after six months, recording growth of 5.3% yoy in September vs. -12.7% in August. The pace of deceleration in imports slowed to -19.6% YoY in September vs. -26% in August.
· Total expenditure contracted by 15.2% YoY in August, vs. growth of 5.6% in July. While revenue expenditure contracted by 14.3%, capital spending contracted by 20.9%. The fiscal deficit for April-August 2020 stood at 109.3% of budget estimate compared to 78.9% a year ago.