By Kang Seung-woo
Korea’s economy remains locked in a global downturn according to a key indicator Wednesday.
In the Composite Leading Indicators (CLI) of the Organization for Economic Cooperation and Development (OECD), Korea stood at 98.8 in August, down 0.6 points from the previous month. It represents the third straight month that Korea’s indicator was below 100.
The CLI is a composite economic indicator that gauges how the economy will fare six months in the future by measuring the current industrial output, housing and financial market conditions, and the gross domestic product (GDP) of each nation.
As for the indicators, the OECD tracks the economy through four stages: expansion, downturn, slowdown and recovery.
A CLI above 100 shows an expansion, while one below 100 with consecutive drops month after month means a slowdown.
The Korea’s CLI fell below the 100 mark in June after posting 99.963 and has been on the decline for the third straight month, with the July reading at 99.4, indicating the nation’s economy is likely to enter an economic downturn.
The latest indices from the Paris-based organization signaled an acceleration in the global economic slowdown, as major economies suffered drops.
In August, the United States and Japan had their credit ratings downgraded, while sovereign-debt crises in eurozone countries including Greece left the global financial market volatile.
The CLI for the OCED area fell from 101.4 to 100.8, marking the fifth consecutive monthly decline.
The CLIs for the United States, Germany and Russia pointed more strongly to a slowdown than last month, although they still remain above 100.
The United States had its CLI peak at 103.2 in March, then slide to 101.5 in August, while Germany’s CLI reading declined from 101.8 in July to 100.5 in August.
Japan was the only country to continue indicating a potential turning point in economic activity.
“For all other major economies, except Japan, the CLIs are now pointing strongly to a slowdown in economic activity,” the OECD said.
The CLI for Asia’s five major countries ― China, India, Indonesia, Japan and Korea ― have fallen for seven months in a row, settling at 99.4 and the reeling 17 eurozone countries saw their index slip below 100 to 99.8.