BofA sees sluggish June, monsoon rains boost agriculture

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.

Related Articles

BofA sees sluggish June, monsoon rains boost agriculture

Brazil's economy seen growing steadily, fiscal deficit to stay high: Reuters poll

Vulnerabilities in non-banks leave door open to 'shocks', says G20 watchdog