S. Korea`s OECD leading indicator down for longest 26 mos

2019.09.12 07:24:52 | 2019.09.12 07:47:04

이미지 확대
The Organization for Economic Cooperation and Development (OECD)`s composite leading indicator (CLI) for South Korea fell to its lowest level in more than seven years in its longest losing streak, underscoring the country`s prolonged economic slump without definite recovery signs.

According to OECD on Wednesday, Korea`s CLI, which is used to anticipate turning points in economic activity six to nine months ahead, stood at 98.79 in July, down 0.08 point from a month ago and lowest in since 98.78 in April 2012. The leading indicator has been hovering below 100 since July last year.

A reading above 100 implies the economy is likely to expand six to nine months ahead while vice versa for below 100.

Ever since Korea`s CLI hit its peak at 101.7 in May 2017, the leading indicator has been on a downward spiral for a 26th month in July, the longest period since OECD began compiling related data in January 1990. The previous record was the decline for 20 straight months from May 1995 to December 1996, as well as from September 1999 to April 2001, respectively.

[OECD Data]이미지 확대

[OECD Data]

Economic indicators released by the Korean government also suggested that prospects for the economy remained unfavorable.

According to Statistics Korea, the country`s leading indicator retreated 0.3 point on month to 97.6 in July. The index has remained below 100 for 11 consecutive months since August 2018 and continued its southbound move since June last year, except April when it inched up 0.1 point.

Korea`s coincident indicator also fell 0.1 point to 98.4 in July, staying below 100 since August 2018. It briefly rose 0.3 point in May.

A reading above 100 for both economic leading and coincident indicators suggest a growth trend while vice versa for below 100. The readings help signal growth and contraction of the economy.

By Moon Jae-yong and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]