NEW DELHI: Coronavirus outbreak could cause a dent to the recovery of the Indian economy amid supply chain disruptions and inflationary pressures, a report said on Thursday.
According to Dun & Bradstreet's Economy Observer report, 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.
Singh further said that inflationary pressures are likely to rise, at least in the short term, through the channels of uncertainty and disruption in the supply chain.
The coronavirus 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.
On January 30, the World Health Organization (WHO) declared the coronavirus (COVID-19) outbreak a global health emergency.
The death toll from the new coronavirus epidemic now stands at 2,744 in mainland China and there are now nearly 78,500 cases in total, officials said on Thursday.
According to Singh, 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.
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. The country's industrial production growth had turned negative in December, contracting by 0.3 per cent, mainly on account of a decline in manufacturing sector output.