NEW DELHI: Coronavirus outbreak could dent the recovery of the Indian economy as it is likely to disrupt supply chain and add inflationary pressures on companies, according to a report by Dun and Bradstreet.
Dun & Bradstreet said weak demand conditions along with high inflationary pressures and geopolitical issues are likely to keep Index of Industrial Production (IIP) subdued. The research firm expects IIP to remain in a range of 0.1-0.5 per cent during January 2020.
Its Economy Observer report released on Thursday said that there are signs of green shoots of recovery in the Indian economy, especially in the optimism levels of India Inc. However, there are some serious concerns which could delay the start of recovery process like the outbreak of Coronavirus.
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It warned that manufacturing companies could face production disruptions if the length of the outbreak gets prolonged and their supply chain is not restored to normalcy.
“The outbreak of Coronavirus, through the direct and indirect linkages of trade and commerce and global supply chain, could impact Indian companies,” said Arun Singh, chief economist, Dun & Bradstreet India, adding this will add to inflationary pressures in the short term, through the channels of uncertainty and disruption in the supply chain.
The outbreak has brought a large part of the world’s second-largest economy China to a standstill and its impact has been felt across industries. The warning got support from Finance Minister Nirmala Sitharaman who added that if the situation will not improve, there may be a shortage of raw materials.