OECD: Korean economy in ‘slowdown’ phase

Major European  economies see leading indicators slump  on debt woes


Korea’s economic conditions declined for three months in a row based on the composite leading indicator of the Organization for Economic Cooperation and Development, data showed on Wednesday.

Korea’s CLI for August stood at 98.8, down 0.06 points from a month earlier. The figure for June was 100.

Korea’s sub-100 reading means its economy is going through a phase of slowdown, along with other major economies tracked by the OECD.

The OECD composite leading indicator is designed to provide early signals of peaks and troughs between expansions and slowdowns of economic activity. The OECD compiles CLIs for 29 member countries, for six non-member economies and for seven country groupings such as eurozone.

The Korean government’s data also suggests that the economic growth might begin flatten out in the May-July period, signaling a difficult time ahead.

The OECD data also show that other major economies in Europe and Americas are also confronting greater uncertainties.

In August, a host of advanced economies, particularly those in the eurozone, saw their CLIs weakening, as agencies downgraded the credit ratings of the U.S. and Japan and the EU sovereign debt crisis sparked panicky reactions from investors around the world.

The leading indicator for France slumped to 99.1 in August, down nearly 1 point from a month earlier, while Germany’s CLI also slid to 100.5, also down from 101.8 recorded in July.

Italy, whose debt travails are keenly observed due to its potential impact on the entire eurozone, saw its CLI drop to 99.0 in July and then slip further to 98.0 in August.

The U.S. indicator peaked at 103.2 in March before falling at a steady pace to 101.5 in August. Britain also dipped below the crucial 100 level to 99.7 in August.

The OECD leading indicators signal that market participants, policymakers and analysts combined have lower expectations about the global economy, which in turn could lead to conservative spending and capital investment in the coming months.

By Yang Sung-jin (insight@heraldcorp.com)