Koreas slowdown fastest among OECD countries

By Kang Seung-woo

South Korea’s pace of economic slowdown has been the quickest among advanced economies but the government believes that the nation’s economic recovery is likely to continue in the first half of this year.

According to the Organization for Economic Cooperation Development (OECD) Tuesday, Korea’s November reading for the composite leading index (CLI) stood at 101.1 after dipping 0.3 points from a month earlier and it marked the 11th straight month of contraction.

In a month-on-month comparison, Korea posted the sharpest drop together with Portugal and Turkey among the OECD members, followed by Australia, Denmark, Spain, Slovakia and Luxemburg that suffered a fall of 0.2 points. Poland and Sweden also saw its leading index decline 0.1 points in the cited period.

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 a contraction.

The CLI drop is believed to have come from the effect of the country’s particularly fast recovery last year.

The nation’s economic growth reached 6.1 percent in 2010 after tallying a 0.2 percent increase in 2009.

The Paris-based organization said that its November composite leading indicator for 29 countries grew to 102.8, up from 102.6 in October, along with a 0.3 point gain for seven major nations ― Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

“The CLIs for China, the United States, France and Japan show clear signs of accelerating economic activity, while the one for Russia points strongly to steady expansion,” it said.

It said that Korea’s month-on-month CLI has been waning for the 11th straight month, meaning that its weakening economic recovery had already started from the second half of last year.

However, the silver lining for Korea is that its leading indicator has been above 100 for 19 consecutive months, which heralds its rebound will continue this year.

“The base effect of the faster-than-expected recovery last year is likely to slow the economic recovery, but it will not be difficult to attain the 5-percent growth goal for this year,” said an official of the Ministry of Strategy and Finance.