OECD Composite Leading Indicators Suggest Economic Growth Approaching Post-Pandemic Peak
10 Nov. 2021 – The post-pandemic economic growth rebound may soon reach its peak in the OECD area as a whole according to the latest OECD Composite Leading Indicators.
Signs of a possible upcoming peak in the growth of economic activity have emerged in the United States, Japan, Germany and the United Kingdom. In France, the CLI also indicates a possible peak ahead, though from below the long-term trend level. In Canada and the euro area as a whole, including Italy, the CLIs continue to point to a moderating pace of expansion.
Among major emerging-market economies, growth is expected to lose momentum in China. In India the CLI also signals growth losing momentum, but real GDP levels are expected to remain below the long-term growth trend. Slowing growth continues to be anticipated for Brazil, while the CLI for Russia continues to point to a steady increase in growth above long-term trends.
The OECD composite leading indicators, which include order books, building permits, confidence indicators, long-term interest rates, new car registrations and many more, are cyclical indicators designed to anticipate fluctuations in economic activity over the next six to nine months. They paint a broad picture of economic activity based on a large amount of recent forward-looking data.
Despite the gradual lifting of COVID-19 containment measures in some countries and the progress of vaccination campaigns, persisting uncertainties may result in higher than usual fluctuations in the CLI and its components. As such, the CLIs should be interpreted with care and their magnitude should be regarded as an indication of the strength of the signal rather than a precise measure of anticipated growth in economic activity.
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