As lock-down restrictions are gradually lifted, it appears that some of the OECD region’s large economies are beginning to show some signs of life.
The Composite leading indicators (CLIs) released by the Organization for Economic Co-operation and Development (OECD) point to a significant improvement from the unprecedented slowdown reached at the height of the current crisis in April, according to a statement. “But the recovery remains fragile as uncertainty persists around the possibility of future lockdowns,” the organisation warns.
“They remain below the levels recorded prior to the coronavirus outbreak and well below long-term trends.”
Similar patterns are visible among major emerging economies, according to the statement, with the CLI in China in particular, where the crisis hit first, returning above pre-crisis levels, albeit below long-term trends. “However, in India the CLI remains close to the crisis low.”
The OECD cautions that in the current circumstances the CLIs should be interpreted with care as considerable uncertainty surrounding the impact of current lockdowns and transitions out of lockdowns remains. “As always, the magnitude of the CLI decline should not be regarded as a measure of the degree of contraction in economic activity, but rather as an indication of the strength of the signal.”
CLIs are designed to provide early signals of turning points in business cycles showing fluctuation of the economic activity around its long term potential level. They show short-term economic movements in qualitative rather than quantitative terms.