Nomura: Corona’s second wave of fatalities for economic recovery

More than 2.5 lakh cases of Kovid-19 infection in the country are worrying the country’s economic recovery. According to Nomura’s Economic Activity Index, the Nomura India Business Reservation Index (NIBRI), the ever-increasing number of coronary cases can be a concern for the country’s economic recovery.

NIBRI capturing pre-epidemic activities took about a year to reach 100. It rose to 99.3 in the week ended February 21. Since then the latest data are available in eight weeks for the week ending April 18th. After that it steadily fell to 83.8.

For the week ended October 25, 2020, NIBRI was lower than 83.8. That was 83.3 that week. These numbers may explain the side effects of the second wave. NIBRI took seventeen weeks to reach 83.3 to 99.3, but it only took eight weeks to cancel those gains.

Experts believe that the worst time is yet to come as more states resort to lockdown to prevent infections from escalating due to lack of medical infrastructure.

Nomura economists Sonal Verma and Arudeep Nandi said the tightness of the lockdown had not been increased since last week. This may be temporary as state hospitals are imposing stricter restrictions on infrastructure. This suggests that the economic impact of the second wave may increase in the coming weeks.

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