India, China take pole position in economic recovery

A diamond factory employee in the process of cutting and polishing a gem | Praveen Jain | ThePrint. Sketched by the Pan Pacific Agency.

NEW DELHI, Nov 2, 2020, Financial Express. While many countries in the world are struggling with the resurgence of the coronavirus pandemic, India and China are at the pole position of economic recovery. Both China and India have reported manufacturing PMI at over a decade high in October 2020 and are quickly recovering the lost ground in the manufacturing sector, Financial Express reported.

While the dragon’s factory output expanded at 53.6, the growth was much more significant in India. India’s manufacturing PMI grew at 58.9, according to the IHS Markit report. Though the improvement in the factory outputs of China, South Korea, Japan, etc indicate slight ease in the global headwind, countries such as Russia are still struggling to moderate the blow caused by the pandemic. Russia’s manufacturing PMI fell to a 5-month low in October.

RBI in its latest report on ‘Minutes of the Monetary Policy Committee Meeting’ underlined that the incoming data point to a recovery in global economic activity in the July-September quarter in sequential terms, although downside risks have risen with the renewed surge in infections in many countries. While the global trade is expected to be subdued, the rebound could turn out to be stronger among advanced economies than in emerging market economies, it added.

Further, the substantial expansion in the manufacturing activity has spread optimism about economic recovery. However, the revival process is likely to need a continuous push from the government. Lack of adequate financial support will likely impede the pace of economic recovery, and the GDP may contract by 6 per cent on-year in FY2020-21, said a report by Barclays.

Meanwhile, the new export orders in India rose at a nearly six-year high pace and the upturn in sales was the strongest since mid-2008 in October 2020. In response to strong sales gains and softer containment measures, firms lifted production at the strongest pace recorded since late-2007. Adding to the delight, the outlook of the manufacturing sector is also bright in the country. The level of confidence is at a 50-month high.

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