What are Capital Goods and why are they crucial?
Capital goods act as inputs for the manufacture of all other goods. Likewise, their production is considered a key indicator for industrial and investment demand in an economy. Capital goods have hit the news recently owing to their huge growth. In May, production jumped up by 85 percent following a massive 1,077 percent rise in April, and 41.9 percent in March. However, this was due to a low base effect. Growth is calculated annually and recent figures have seen a huge rise in multiples compared with early 2020 when the national lockdown was in full force. Compared with May 2019, capital goods production remains 36.8 percent lower, indicating the economy is far from recovering to pre-pandemic levels.