OECD says India's growth outlook is stable

13 Jul 2022 , 08:26 AM

Amid high inflation, poor consumer confidence, and falling stock prices, the GDP estimate for the US has been revised downward from “steady growth” to “growth losing pace.”

According to a report on the Composite Leading Indicator (CLI) issued by the Organization for Economic Co-operation and Development, the economic growth in India is stable while it is ebbing in most other major nations, such as the US and China (OECD).

From “steady growth” in last month’s release to “growth losing momentum” this month, the growth outlook for the US has been lowered.

According to the OECD’s study, “the CLIs continue to anticipate growth losing speed, pulled down by high inflation, poor consumer confidence, and dropping share prices, in the United Kingdom, Canada, and the euro area as a whole, including Germany, France, and Italy.”

The CLI is made to give early warnings of business cycle turning points by displaying fluctuations in economic activity at or near its long-term potential level. It is based on a variety of indicators that can be used to predict the future, including order books, measures of consumer confidence, building permits, long-term interest rates, and new vehicle registrations, among others.

But the OECD issues a warning, noting that the ongoing conflict between Russia and Ukraine is causing more swings in its CLI components. India is one of the largest emerging-market economies, and growth there is forecast to remain steady. Brazil and China are projected to see a slowdown in growth.

The Chinese economy has been devastated and the country’s goal of 5.5% growth in 2022 is in doubt due to widespread lockdowns throughout industrial hubs that have been stoked by the “zero COVID policy” of the nation.

Brazilian economic confidence and purchasing power have been negatively impacted by rising prices and tightening banking conditions. Additionally, uncertainty is being added by the impending presidential election because, until 2023, investments are predicted to be muted in the nation.

Regarding India, the economy has lost some of its momentum even though the most recent CLI shows that the nation’s growth is still largely stable. The nation’s CLI decreased from 100.3 in March to 100.1 in June.

The OECD had previously stated in its Economic Forecast Summary that “after recording the strongest GDP rebound in the G20 in 2021, the Indian economy is progressively losing momentum as inflationary expectations remain elevated due to rising global energy and food prices, monetary policy normalizes, and global conditions worsen.”

Although India’s inflation is predicted to progressively drop, the country’s current account deficit is predicted to grow as a result of the spike in energy imports.