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G. Chandrashekhar

Mumbai , Oct. 6

OECD composite leading indicators (CLI) signal a weakening outlook for major global economies.

In a release today from Paris, OECD forecast that a slowing economic expansion lay ahead in the OECD area (covering 29 countries) with August 2006 data showing weakening performance in the CLI's six month rate of change in all the major seven economies, except Canada.

The latest data for OECD non-member economies point to a weakening outlook for China and steady expansion in India, Russia and Brazil.

The strong positive correlation between global economic activity and consumption of commodities such as metals and energy is well known. A weakening outlook can lead to slowdown in commodity consumption, with implication for prices.

However, there is a school of thought that believes falling commodity prices can help reverse the slowdown by accelerating demand at lower prices. To be sure the CLI weakening outlook does not signal onset of recessionary conditions.

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