Economy losing growth momentum

By Kang Seung-woo

The nation’s economy has shown signs of losing growth momentum, with a key leading indicator falling for the 10th straight month.

The Organization for Economic Cooperation and Development (OECD) said Wednesday that the OECD composite leading indicator (CLI) for Asia’s fourth-largest economy in September stood at 101.9, down from the previous month’s tally of 102.4.

The CLI is a composite economic indicator that gauges how the economy will fare six months ahead by measuring the current industrial output, housing and financial market conditions, and the gross domestic product (GDP) of each nation. A figure above 100 means the economy will continue to expand, while a reading below 100 means economic downturn.

The average for the 33 OECD members has remained unchanged at 102.8, marking the fourth consecutive month at that level and it means that economically-advanced countries will continue to expand without falling back into recession, the Paris-based think tank said.

“The CLIs show signs of continuing expansion in Germany, Japan, the United States and Russia, while pointing to a moderate downturn in Canada, France, India, Italy and the United Kingdom,” the OECD said in a statement.

In the cited month, Japan and the United States grew by 0.2 points and 0.1 point, respectively, while Canada and Italy both lost 0.2 points.

Although the index for Korea is still above the 100 mark, the nation’s economic recovery will probably be at a slower tempo.

Korea surpassed the 100 level for the first time in May 2009 on its way to peaking at 104.9 in November on the same year, but since then, its index has been declining.

The bad sign came after the government came up with a poor economic outlook for next year.

It said Monday that despite the revised estimation of a 6 percent growth this year, the nation’s GDP growth for 2011 is expected to sink to as low as 4 percent, due to the waning effect of stimulus measures and the base effect of this year’s better-than-expected performance.

“Growing uncertainties overhanging the global economy, sparked by the currency feud between China and the United States, and the base effect of the nation’s better-than-expected display are likely to weaken the economic rebound next year,” said an official of the Ministry of Strategy and Finance.

Meanwhile, market watchers say that the recovery will gain steam again in the second half of 2011.

“Although the economy is expected to struggle in the first half of next year, the global economy is forecast to gather pace and domestic demand will increase in the latter part,” said Yu Byoung-gyu, executive director of Hyundai Economic Research Institute.