The latest industrial production data for June paints a grim picture, with growth hitting a 5-month low of 4.2%. The slowdown in government capex during the elections and lackluster rural demand have hampered manufacturing growth significantly. The National Statistical Office also revised upwards the industrial production data for May from 5.9% to 6.2%.
Notably, the manufacturing sector, which makes up a significant portion of the Index of Industrial Production (IIP), recorded a sharp decline in growth from 5% to 2.6% in June. Consumer non-durables posted the weakest growth at -1.4%, indicating a slow recovery in consumption. Analysts warn that this poor industrial performance could drag down overall GDP numbers for the quarter.
While mining and electricity sectors saw some acceleration, the overall picture remains concerning. With manufacturing growth faltering and investment momentum cooling, experts are concerned about the stability of industrial recovery. The impact of the elections on capital goods growth further highlights the economy’s subdued investment activity.
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