India's growth remains stable while most other economies lose momentum: OECD report

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The economic growth in India remains stable while in most other major economies, including the US and China, it is losing momentum, according to a report on the Composite Leading Indicator (CLI) released by the Organisation for Economic Co-operation and Development (OECD).

The growth outlook for the US has been downgraded from ‘stable growth’ in last month’s release to ‘growth losing momentum’ this month.

“In the United Kingdom, Canada and in the euro area as a whole, including Germany, France and Italy, the CLIs continue to anticipate growth losing momentum, dragged down by high inflation, low consumer confidence and declining share prices,” said OECD in its analysis.

The CLI is designed to provide early signals of turning points in business cycles showing fluctuation of the economic activity around its long-term potential level. It is compiled based on a range of forward-looking indicators such as order books, confidence indicators, building permits, long-term interest rates, and new car registrations, among others.

OECD, however, cautions that it is seeing a higher amount of fluctuations in its CLI components due to the uncertainties related to the ongoing Russia-Ukraine war.

Among major emerging-market economies, India is anticipated to maintain stable growth. Meanwhile, growth is expected to lose momentum in China and Brazil.

Rampant lockdowns across industrial hubs fuelled by the country’s ‘zero COVID policy' have crippled the Chinese economy and put the country’s target of 5.5 percent growth in 2022 in doubt.

In Brazil, rising inflation, and tighter financial conditions have eroded economic sentiment and purchasing power. Moreover, the upcoming presidential election is adding uncertainty as investments are expected to remain subdued in the country until 2023.

As for India, although the latest CLI signals that the country's growth remains relatively stable, the economy has come off its high. While the country's CLI stood at 100.3 in March, it came down to 100.1 in June.

“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 normalises and global conditions deteriorate,” OECD had earlier said in its Economic Forecast Summary.

Although inflation is expected to gradually decline in India, the surge in energy imports is expected to widen the country’s current account deficit.