Eric Schweitzer, president of the Association of German Chambers of Industry and Commerce said that, “industry is in need of unconventional and immediate actions.”
The nationwide lockdown has stalled all economic activities. The recession that the economy will face will be worst since 1930’s. It is also believed that the economic downturn is going to be worse than 2008-2009 global financial crisis.
All sectors of the economy are experiencing the ravages of this virus.
Manufacturing sector witnessed the biggest decline in April
The country’s manufacturing sector witnessed the biggest decline so far last April due to the lockdown across the country and the Purchase Manager Index (PMI) released by IHS Market fell to 27.4.
The IHS market releases manufacturing and service sector data on a month to month basis. The index rise above 50 indicates increase and below it indicates a decline, while a 50 indicates stability.
The more index falls below 50, the greater the decline in output. The intensity of the decline in the month of April can be gauged from the fact that even during the 2009 global economic downturn, the manufacturing PMI of the country had fallen to around 44.
Season of mass layoffs
The agency’s report released today said that April saw an unprecedented decline in Indian manufacturing output. The corona virus ‘Covid-19’ epidemic has been caused by a nationwide lockdown with businesses shutting down. There was a record drop in new orders in an environment of low demand and companies laid off huge numbers of employees.
IHS Market economist Eliot Kerr reacted to the report stating that a positive aspect between the decline in production, new orders, demand and employment is that traders’ perception of the outlook for the next year is optimistic, although the level of optimism is lower than the historical average.
Demand reduction between lockdown
As per the data, there was also a huge drop in new orders due to decrease in demand amid lockdown. For the first time in the last two and a half years, this low new orders have been registered. The biggest drop in demand from abroad was 15 years.
It is noteworthy that IHS Market has been collecting data for the world’s economies since 15 years. Due to the decrease in demand, companies have laid off huge workforce. The speed of retrenchment was also the highest in 15 years. Also, the speed of raw material procurement has also registered as the fastest decline in 15 years.