Lockdowns will slow recovery; business resumption remains concerning: Nomura

Lockdowns in Gujarat, Delhi, Madhya Pradesh, Gujarat, Haryana and Himachal Pradesh can slow the economic recovery and the outlook on business resumption remains concerning, a Japanese brokerage said on Monday.
Nomura, which has built a business resumption index to gauge the recovery after the pandemic, said the index moved up by a notch for the week ended November 22 but continues to be below pre-pandemic levels.
It attributed the increase to a sharp increase in the Apple driving index, which finally crossed pre-pandemic levels, and a continued pick up in Google’s retail and recreation mobility index.
However, it is the localised lockdowns in various states due to an increase in COVID-19 infections which seemed to worry the analysts.
The lockdowns could “slow the sequential pace of recovery in the next 2-3 months, following the sharp rebound thus far”, the brokerage warned.
It can be noted that Maharashtra on Monday introduced a standard operating protocol for people travelling into the state from the states reporting a resurgence in Covid-19 cases. The state – which had the highest number of cases in the initial days of the pandemic – has also warned that the second wave of infections can hit like a tsunami and hinted that it may itself be taking a call on lockdown soon.
Nomura said an early deployment of the vaccine against the infection will prove to be a tailwind for the second half of the ongoing fiscal.
Multiple vaccine candidates are presently under development and showing steady progress, but the longevity of protection is uncertain.
In what it termed as a “worrying” sign, the brokerage said the week to November 22 saw a decline in the labour participation rate to 39.3 percent from 39.5 percent in the previous week, while power demand growth also declined.