Economic Activity Resilient, Trade Policy Outcomes In July To Shape Outlook: RBI Bulletin

Various high-frequency indicators for May point towards resilient economic activity in India across the industrial and services sectors, the Reserve Bank of India said on Wednesday in its monthly bulletin on economic activity.

High-frequency indicators for May present mixed signals on aggregate demand. Urban demand showed signs of moderation as passenger vehicle sales declined with a sharp drop in entry-level segment. However, rural demand improved as evident from the increase in the retail sales of two-wheelers, the bulletin stated.

High-frequency indicators for the ongoing kharif agricultural season indicate largely favourable conditions for good sowing, though uncertainties remain on the spatiotemporal distribution of monsoon.

The early onset of the monsoon has helped in reducing the incidence of heat waves on standing crops. However, it was followed by a monsoon break in the first half of June. Rainfall has picked up again, according to the bulletin.

Protracted trade policy uncertainties and rising trade barriers pose the risk of significantly scarring the global economy. The intensifying geopolitical tensions, too, may further debilitate the already weakened growth impulses, the bulletin stated.

"In this context, the trade policy outcomes in July, after the temporary tariff hiatus is over, and the future course of geopolitical events would likely shape the medium-term economic prospects," it added.