OECD warns of weakening European economy from August

The OECD, the organization that brings together the most developed economies, has issued a warning message on weakening of the eurozone economy as a whole Including Germany, France and Italy. Its Composite Leading Indicator (CLI), which the agency takes as a guide to forecasting turning points in economic activity over the next six to nine months, confirms that this downtrend began after the invasion of Ukraine in August. . I accelerated.

In particular, the indicators became bad for almost all countries last month and this drop was particularly pronounced in many countries of the euro zone, especially in Germany (44 hundredths, 98.47 points). This gap should be understood as a sign that the trend is changing and not so much a measure of growth of activity. The decline extends to Italy (27 hundredths, 98.15 points), Spain (18 hundredths, 98.63) or France (14 hundredths, 97.96).

Outside the euro zone, declines were recorded, although less pronounced than in previous months in Canada (27th hundredth, 98.53 points), America (13 hundredths, at 98.81). Unlike all these countries, the indicator remained above the 100 level, indicating the long-term average in both Japan (100.49), as Mexico (101.11 points) and Colombia (10.89), despite a slight decline in the last two cases.

Among the major non-OECD emerging market economies, the ICA for China and Brazil Now indicates a slower pace of development. Meanwhile, the same pointer for India, shows steady progress. The OECD CLIs are cyclical indicators based on a variety of data, including order books, building permits, confidence indicators, long-term interest rates or new car registrations, among others . Most of these monthly indicators are available until August of this year.

Faced with continuing uncertainties related to the war in Ukraine, renewed threats around COVID 19 and the impact of high inflation on real household income, CLI components “May be subject to larger than normal fluctuations”, specifies the organization. Therefore, from the OECD, they insist that the indicators should be interpreted with caution and that their magnitude should be seen as “an indication of signal strength” rather than a measure of growth in activity. economic.

The publication of the body’s indicators comes after the European Central Bank (ECB) updated its quarterly macroeconomic projections last Thursday and without mentioning it directly, reflects the danger of a standoff between countries sharing the euro. In a forecast table which in fact assumes significant changes from the one published in June, the issuer estimates that GDP as a whole will grow by a mere 0.9% next year and that inflation will be always 5.5%. will stay. , well above its target of 2%.

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