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MOSL: ECOSCOPE: EAI – Monthly Dashboard: Economic activity grows decently in Aug’22; Expect 2QFY23 real GDP growth at ~6.5% YoY

.  ECOSCOPE: EAI – Monthly Dashboard: Economic activity grows decently in Aug’22; Expect 2QFY23 real GDP growth at ~6.5% YoY

• Preliminary estimates indicate India’s EAI for GVA grew at a five-month low rate of 6.9% YoY in Aug’22 v/s 7.2%/11.8% YoY in Jul’22/Aug’21, respectively. Although there was some recovery in farm and industrial activities, services sector dragged EAI-GVA growth.
• On the contrary, EAI-GDP contracted 0.3% YoY in Aug’22 – marking its second successive contraction in 18 months. This was owing to a negative 8.6pp contribution by net exports, as real imports grew ~31% YoY during the month while real exports declined ~3% YoY.
• Total consumption recovered to +5.4% YoY (v/s a 13-month low growth of 3.2% YoY in Jul’22), because of better petrol sales and government spending. Excluding fiscal spending, private consumption also rose faster at 4.8% YoY in Aug’22, from 4% YoY growth in Jul’22. Investments continued to grow at double digits (11.4% YoY) for the fifth consecutive month in Aug’22, fueled by strong auto sales, imports of capital goods and diesel sales.
• A monthly analysis of selected indicators for Sep’22 suggests weakness. Some indicators such as continued drop in exports, slower growth in imports, three-month low manufacturing PMI reading and toll collections were only partly offset by higher growth in power generation and vehicle registrations.
• Overall, our in-house estimates suggest that, the economic activity growth was better than our expectations in Aug’22. Further, although weaker, it seems to be holding well in Sep’22 as well. Accordingly, we expect that real GDP growth could be ~6.5% in 2QFY23, better than our previous of ~5.5% but similar to the RBI/market of 6.3%.