Home / Economy / The week ahead: GDP, Opec meet & Shanghai’s lockdown

Every Monday, Mint’s Plain Facts section features key data releases and events to look for in the coming week. India’s gross domestic product (GDP) data for the quarter that ended in March will be in focus this week. The oil producers’ international cartel, the Organization of the Petroleum Exporting Countries (OPEC), is set to meet to take a call on production targets with crude oil prices still running high. Shanghai, the financial capital of China, may officially emerge from its strict lockdown, which was imposed as part of its ‘zero-covid’ policy.

1. India GDP

India is set to release GDP growth numbers for the March-ended quarter on Tuesday. Growth is likely to have slowed as high commodity prices proved a dent on companies’ margins and economic recovery had a brief setback because of the third covid-19 wave in January. Estimates from 21 economists polled by Mint fall in the range of 3.2-5%, with a median estimate of 3.9%. The country’s GDP had grown 5.4% in the October-December 2021 quarter.

Commodity prices, from oil and metals to grains, have been on the upward spiral because of the war between Russia and Ukraine. Ratings agency Icra said a fall in wheat yields and the slower recovery of “contact-intensive services" because of the third covid-19 wave, as well as the high base from last year, is likely to have hurt growth in the March quarter. If the growth is in line with the median estimate, it would be at the lowest pace in a year.

2. India PMI

India’s manufacturing and services purchasing managers’ index (PMI) numbers for May will be released on Wednesday and Friday, respectively. The manufacturing sector started the financial year on a positive note by registering faster growth in April (54.7) than in March (54.0). A reading above 50 denotes month-on-month expansion. The sector saw quicker increases in production and factory orders with pent-up demand flowing in as covid restrictions were lifted. However, rising inflationary pressures could temper demand as firms pass on the hikes to clients.

The services PMI clocked a five-month high of 57.9 in April, up from 53.6 in March. Consumer services and finance and insurance were the top-performing areas because of strong demand, while real estate and business services saw contractions, noted S&P Global. However, elevated inflation levels and rising input costs would weigh on services, too, in the coming months.

3. Opec+ meet

Oil producers, led by Opec, are set to meet on Thursday. All eyes will be on the international cartel’s decision on the pace of output increases to tame crude oil prices. Crude prices, which were already rising as global oil consumption rebounded from the pandemic, have held over $100 per barrel since the Russia-Ukraine war broke out. Opec+ keeps falling short of its oil production targets. It failed to raise output in April by the amount required according to an earlier agreement. Its 13 members increased production by only a combined 153,000 barrels per day.

Battered by inflation, the west has repeatedly urged the group to raise output. However, Reuters reported, quoting sources, that Opec+ plans to hike July output targets by no more than 432,000 barrels per day at its upcoming meeting.

4. India-B’desh trains

Mitali Express, a new India-Bangladesh train service, will begin operations on Wednesday, over a year after it was inaugurated on the 50th anniversary of bilateral ties. The train will cover the 513 km between New Jalpaiguri and Dhaka in nine hours. This is the third train service between the neighbours. All three were on hold for two years because of the pandemic.

The two other trains, the five-days-a-week Maitree Express and the biweekly Bandhan Express, which link Kolkata to Dhaka and Khulna, respectively, resumed services over the weekend. The Mitali Express brings the number of India’s international railway services to five. The other two are between India and Pakistan, which stand suspended as of now. According to Indian ministers, the new service will help boost tourism and ties between the two countries and will also see the setting up of shopping centres and hotels near the stations in the coming months.

5. Shanghai’s lockdown

China’s financial capital and largest city Shanghai may officially emerge from its strict lockdown, which has been imposed since late March, on Wednesday. Many of China’s major cities continue to be under severe restrictions amid a spike in local covid-19 cases.

Nationally, the cases have been steadily declining since late April. However, a rather rigid implementation of China’s “zero covid" policy has forced millions indoors. The tremors of these lockdowns have been felt not just on the Chinese economy but the global economy as well. As China’s retail sales and industrial production saw the sharpest declines since February 2020, major investment banks have cut their China GDP forecasts for 2022. With China’s exports hitting a two-year low, manufacturers across the world are facing a supply shortage and inflationary pressures. China is likely to stick to its strict policy on covid, at least until October 2022, when Xi Jinping is likely to get a third term.

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