While the advance estimates for the third-quarter GDP released on Wednesday indicate that the economy has bottomed out, they also highlight how uneven the recovery is turning out. This has important implications for policy. The 7 per cent year-on-year decline in GDP in Q3 was less severe than the 13.3 per cent contraction in the preceding quarter. On a seasonally adjusted quarter-on-quarter basis, Q3 growth was up a robust 7.9 per cent, although from a low base.
But these aggregate numbers mask wide differences in performance between sectors and even within sectors. Manufacturing was the only sector that expanded on a year-on-year basis, by 2 per cent. In sharp contrast, the construction sector contracted by 44.7 per cent and the service sector by 8 per cent. But within services, there were wide variations. While finance, insurance and IT services held up well, and retail and food services recovered slightly, aviation, hospitality and entertainment continued to suffer. Among these, the tourism-dependent segments will find the going tough even after the next phase of opening up, as long as borders remain closed to tourism. This patchy picture has many implications.