OECD Projects More Slowing of Indian Economy

BRIC Business India

The Organisation for Economic Co-operation and Development (OECD) predicted further slowing down of the Indian economy, even while indicating that China has hit the bottom and is likely to show improvement in the next six months.

With regard to other BRIC nations, the Composite Leading Indicators (CLI) prepared by the OECD suggests that economies of Brazil and Russia would continue to perform on the down side.

The CLI designed to provide early signals of turning points in business cycles, rose by 0.4 per cent for India in April 2009.

According to the OECD -- a grouping of rich nations -- business cycles refer to fluctuations of economic activity around its long-term potential level.

"The CLI for China increased 0.9 point in April 2009 but was 8.3 points lower than a year ago. The CLI for India increased by 0.4 point in April 2009 but was 7.9 points lower than in April 2008," OECD said in a statement today.

Along with India, the OECD has forecast "slowdown" of the economy for the US, Japan and Germany, among others.

Having recorded a growth rate of 9 per cent for consecutive three years ending 2007-08, the Indian economy slipped to 6.7 per cent during 2008-09, mainly on account of the results of the global financial meltdown.

According to the Reserve Bank of India's recent projections, the growth rate could slip to 6 per cent in the current fiscal year.

Even President Pratibha Patil in her address to the joint session of Parliament last week said, "The current financial year is expected to see a slowing down of growth on account of the global recession."

The grouping has projected "strong slowdown" for the Russian and Brazilian economies.

Among the BRIC nations, Russia and Brazil saw the CLI decline in April. While the indicators for Russia dropped by 0.3 point, that of Brazil decreased by 0.7 point.

Meanwhile, the OECD has noted that some major economies are witnessing an "easing pace of deterioration".

"While it is still too early to assess whether it is a temporary or a more durable turning point, OECD composite leading indicators (CLIs) for April 2009 point to a reduced pace of deterioration in most of the OECD economies with stronger signals of a possible trough in Canada, France, Italy and the United Kingdom," the statement noted.

For the G-7 nations -- Canada, France, Germany, Italy, Japan, the United Kingdom and the US -- the grouping has forecast a "slowdown".

BRIC Business India