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India to defy global trend to show strong growth

india Updated: Aug 16, 2006 15:59 IST
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India, China and Russia are expected to show strong economic growth, bucking the trend of slow growth in seven major nations of the Organisation for Economic Cooperation and Development (OECD) such as the US, Japan and Britain, a new study has forecast.

The forecast released on Friday by Paris-based OECD says "slowing expansion lies ahead in the OECD area".

According to the latest composite leading indicators (CLIs), the June data shows "weakening performance in the CLI's six-month rate of change in the major seven economies", states OECD.

The OECD CLI is designed to provide early signals of turning points (peaks and troughs) between expansions and slowdowns of economic activity. The CLI is an instrument of analysis that is designed to provide qualitative information on short-term economic movements rather than quantitative measures.

The OECD uses the six-month rate of change of the CLI as its preferred pointer to possible turning points.

"The latest data for major OECD non-member economies point to continued strong expansion in China, India and Russia, while the CLI for Brazil signals a weaker outlook," the study points out.

Giving the breakup of data, the study states OECD CLI for China rose by a strong 3.5 points in June, and its six-month rate of change shows an upward trend since February 2005.

The CLI for India increased by 0.9 point in May and its six-month rate of change rose for the sixth consecutive month. Similarly, the CLI for Russia increased by 0.9 point in June and its six-month rate of change now shows an upward trend since March 2005.

In contrast, the CLI for the OECD area - covering 29 countries - decreased by 0.1 point in June to 109.7 from 109.8 in May, and its six-month rate of change was down for the third consecutive month.

Further break up shows the CLI for the United States fell by 0.2 point in June, and its six-month rate of change was down for the fourth consecutive month. In June, the CLI for Japan decreased by 0.9 point with its six-month rate of change showing a downward trend since March 2006.

Similarly, the CLI for Canada increased by 0.3 point in June, but its six-month rate of change shows a slight downward trend since February 2006.

The Euro area covering 12 countries: Austria, Belgium, Finland, France, Germany, Greece, Italy, Ireland, Luxembourg, the Netherlands, Portugal, and Spain, shows CLI increased by 0.2 point in June, but its six-month rate of change decreased for the first time since May 2005.

The CLI for Britain decreased in June by 0.3 point and its six-month rate of change has decreased for the last two months. For France the CLI decreased by 0.1 point in June, with its six-month rate of change decreasing for the second consecutive month.

The CLI for Germany rose by 0.1 point in June, but its six-month rate of change has decreased for the third consecutive month. For Italy, the CLI decreased by 0.2 point in June and its six-month rate of change also fell.

In case of Brazil also, the CLI in June fell by 0.4 point and its six-month rate of change was down for the fourth consecutive month.

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