The world economy is in recovery, with no indication that leading economies will slip back into recession, the Organisation for Economic Cooperation and Development said Friday.
The Wall Street Journal reports that the Paris-based think-tank's composite leading indicator of economic activity in its 31 members rose to 103.6 in January from 102.8 in December. However, while the leading indicators for each of the Group of Seven largest developed economies continued to rise, as did those of China and Russia, the leading indicators for Brazil and India fell.
That performance indicates that the recovery in those two developing economies "may...lose momentum," according to the OECD. "By contrast, economic activity is projected to continue to expand in China and Russia," the OECD said.
Most major economies emerged from recession in the second and third quarters of 2009, and the OECD's leading indicators suggest that recovery will continue. The continued increase in the leading indicators will reassure policy makers, since the data have a good track-record of presaging pickups and slowdowns in economic activity going back to the 1980s.
The OECD's leading indicators are designed to provide early signals of turning points between the expansion and slowdown of economic activity, and are based on a wide variety of data series that have a history of indicating swings in future economic activity. Some 224 data series are used in total, or between five and ten for each country.
According to the leading indicators, economic activity in the Group of Seven leading industrial nations and Russia hit a trough in May 2009, recovering thereafter. In China, the trough came in February 2009, while in India it occurred a month earlier.
Earlier in the week, a J.P. Morgan Chase & Co. survey for February backed up the OECD's prediction of continued global recovery after a strong January. The J.P. Morgan Global Manufacturing and Services Purchasing Managers Index rose to 53.6 in February from 53.2 in January, marking the strongest pace of expansion since October.