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Business News/ News / World/  Global outlook deteriorates slightly: OECD
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Global outlook deteriorates slightly: OECD

Composite leading indicator for 33-nation OECD area falls to 100.1 in August from 100.2 in July

China’s outlook remained stable for a third straight month. Photo: Peter Parks/AFP (Peter Parks/AFP )Premium
China’s outlook remained stable for a third straight month. Photo: Peter Parks/AFP
(Peter Parks/AFP )

Paris: The outlook for the world’s major economies including the US and Germany has deteriorated slightly, although China may be stabilizing after a recent slowdown, the Organisation for Economic Co-operation and Development (OECD) said on Monday.

In its latest monthly report on the global economy, the OECD said its composite leading indicator (CLI) for the 33-nation OECD area fell to 100.1 in August from 100.2 in July, pointing to a continuing trend of weakening growth.

The reading for the US dipped to 100.5 from 100.6, and the outlook for Germany dropped 2 points to 98.9, below the reading for the euro area as a whole.

Russia saw the biggest decline in its leading indicator, dropping 3 points to 98.8, while Brazil saw an improvement as did Britain, although the UK economy remains weak.

China’s outlook remained stable for a third straight month, albeit at 99.4 its reading was still below long-term trend—represented by a figure of 100.

“In China, the CLI points to soft growth, but tentative signs are emerging that the recent deterioration in the short-term outlook may have stabilized," the OECD said in its report.

The CLI for the euro area fell to 99.4 from 99.5, while the Group of Seven (G7) major industrialised nations—France, Germany, Italy, Japan, Britain, Canada and the US—slipped by one point to 100.2.

Britain’s CLI rose to 100.1 from 100 previously, and Brazil’s rose 2 points to 99.5.

Despite the improving signs, Britain still needs to drag itself back from a low level—in its global economic outlook released last month, the OECD said it now expected the British economy to shrink by 0.7% in 2012, compared to a previous forecast for growth of 0.5%.

Overall, the G7 countries are expected to expand by 1.4% in 2012, according to the Paris-based think tank.

All other major economies saw a one-point slip in their CLIs, including Japan, which dropped to 100.3 from 100.4.

The OECD’s composite leading indicators are designed to provide early signals of turning points in business cycles. Turning points of CLIs tend to precede turning points in economic activity relative to long-term trend by around six months. Reuters

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Published: 08 Oct 2012, 08:23 PM IST
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