India’s services industry, a key driver of economic growth, shrank for a fifth straight month in July 2020 as restraining measures to stop the spread of the coronavirus hurt business activity and led to record job cuts, a survey showed.
The country has recorded the third highest number of coronavirus cases globally, behind only the United States and Brazil, with over 1.8 million confirmed infections and more than 38,000 deaths, according to a Reuters tally.
That has forced state and central governments to impose strict lockdown measures to curb the spread of the virus, keeping people at home and businesses closed, stifling demand and cementing fears of a deep recession.
July was the fifth straight month the index was sub-50, the longest such stretch since a 10-month run to April 2014.
Although slightly improved from June, sub-indexes tracking domestic and foreign demand remained firmly in contraction territory even though firms cut prices despite an uptick in input costs.
Meanwhile, firms remained pessimistic about the next 12 months and cut jobs at the fastest pace on record.
A composite PMI, which includes manufacturing and services, suggested an ongoing deep contraction in Asia’s third-largest economy, falling to 37.2 from June’s 37.8. A
poll shows analysts expect the economy would shrink 5.1% in the fiscal year 2020-21 – the biggest decline since 1979.
India’s worsening economic outlook has likely raised the chances the Reserve Bank of India will cut interest rates at its policy meeting on Thursday.
