Bloomberg Paris
CHINA and India, two of the fastest-growing economies, were witnessing strong signs of slowdown, while most of the developed nations were experiencing moderate growth, the Organisation for Economic Co-operation and Development (OECD) said yesterday.
The Paris-based think tank said that economic activity was below long-term trends in India and China.
The latest readings are based on composite leading indicators, which provide early signs of turnaround in a country’s economic activity.
“Composite leading indicators for China and India point strongly to a slowdown with economic activity falling below long-term trend,” the OECD said.
India’s composite leading indicator index slipped to 97.8 in May from 98 in the previous month. The composite index for China declined to 99.2 in May from 99.4 in April.
After clocking 8.4 percent growth for two consecutive financial years, the Indian economy expanded just 6.5 percent in the past fiscal year.
The Indian government, in its 2012/13 Budget, projected growth of around 7.6 percent this fiscal year.
The think tank said its latest composite leading indicators index, which was designed to spot shifts in economic cycles, pointed to an easing of economic activity in most major OECD member economies and a more marked slowdown in most major non-OECD economies.
The OECD is a grouping of mostly developed nations that account for over 60 percent of global economic output.
“The composite leading indicators for Japan, the US and Russia remain above long-term trend but continue to point to dissipating momentum, especially in Russia,” it said.
Further, the indicators for France, Germany, Canada, the UK and the euro zone revealed economic activity was below long-term trend. “In Italy the composite leading indicator signals point more strongly to a slowdown,” it said.
The OECD warned that “continuing weak growth” was in store for Britain as the global economy slowed.
The OECD grouped Britain together with Germany, France and Canada in terms of economic outlook, while Italy and the euro zone were heading for a sharper slowdown.
The UK index remained unchanged in May at 99.7, where anything below 100 represents below long-term trend growth.
“This reinforces current mounting concern over the economy’s recent performance and its outlook,” said Howard Archer, the chief UK economist at IHS Global Insight.
Britain officially fell back into recession in the first quarter of the year, plunging the economy into its first double dip since 1975.
The recession is likely to have continued into the second quarter, according to economists. “We believe it is more likely than not that the UK economy contracted modestly in the second quarter, thereby suffering a third successive decline,” Archer said.
The OECD’s China index slipped to 99.2 in May, reflecting a “slowdown” in the second-largest economy.
The US fared better, remaining at 100.9 on the index reflecting “moderating growth”.