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G. Chandrashekhar

CLIs of major economies affected by interest rates spread

Mumbai , Jan. 13

The latest OECD composite leading indicators (CLIs) signal a mixed outlook for major global economies. Continued economic expansion lies ahead in the OECD area, a report from Paris says.

The November 2006 data showed weakening performance in the six-month rate of change in the Euro area and in the US, but improved performance in Canada and Japan.

The spreads between short- and long-term interest rates are contributing negatively to the performance of CLIs in all the major seven economies, while business confidence is contributing positively in the Euro area and the US, and negatively in Canada, the report pointed out.

Strong Growth

The latest data for major OECD non-member economies pointed to a weakening outlook for Brazil and Russia and strong growth in China and India. The CLI for the OECD area increased by 0.2 points in November to 109.5 from 109.3 in October.

But its six-month rate of change showed a downward trend since March 2006. The CLI for India increased by 1.7 points in October (latest available) and its six-month rate of change was up for the third month in a row.

For China, the CLI rose by a strong 4.1 points in November, and is six-month rate of change increased for the second month in a row. The OECD CLI is designed to provide early signals of turning points (peaks and troughs) between expansion and slowdown of economic activity.

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