BofA sees sluggish June, monsoon rains boost agriculture
2024.07.22 09:08
Investing.com — Bank of America (BofA) Global Research, in a note on Monday, reported that economic activities in India were sluggish in June following a strong May. June, typically a seasonally weak month, saw a slowdown across most high-frequency indicators compared to May.
Several high-frequency indicators, such as freight traffic and automobile sales, saw a slower pace of growth in June. However, positive momentum continues in the agricultural sector.
Despite an 11% deficit in normal rainfall in June, the season-to-date monsoon rainfall improved to 98% of the long-period average, with July rains picking up. This has led to an expansion in the area sown under Kharif crops, with rice, pulses, and oilseeds acreage all showing strong year-on-year growth, BofA said.
June saw a slight rise in inflation, with the Wholesale Price Index (WPI) reaching 3.4% year-over-year. While certain categories saw inflation increases, fuel and power costs showed some moderation.
Credit performance continues to improve, with growth in non-food credit remaining strong across all sectors. This is particularly evident in agriculture, which saw a growth rate of 24.4% year-over-year.
Seasonal factors contributed to a narrowing of the trade deficit to $21 billion in June, down from $22.3 billion in May. Both exports and imports declined, but non-oil exports remained stable. Non-oil, non-gold imports reported an improvement in their growth rate compared to May.
BofA expects a marginal improvement in July, although rainfall may limit significant upticks in passenger and freight movement.
