RIO DE JANEIRO, BRAZIL – The Organization for Economic Cooperation and Development (OECD) composite leading indicators for March point to “slowing growth” in Brazil. It is the only major economy to show a slowdown, while in all the others, the situation varies between “constant growth” or “increase in expansion”.
In contrast to the global trend, the country’s composite indicators, which signal early turning points in the economic cycle, declined 0.32 point in March
The OECD’s composite leading indicators system is designed to signal early turning points in the business cycle – fluctuations in output or economic activity relative to its long-term potential.
Four cyclical phases are defined. In the “expansion”, the indicator increases and stays above 100; in the “inflection’ the indicator decreases but remains above 100; in the “deceleration” there is a drop below 100, and in the “recovery” the indicator increases but still stays below 100.
This means that the Brazilian economy remains on the growth path but that the trend is slower.
Overall, the OECD indicators, designed to anticipate turning points in economic activity relative to trend, continue to strengthen in most major economies.
According to the OECD, indicators continue to rise at a steady pace in the US, driven by expanding consumer confidence. In Japan, Canada, and the euro zone as a whole, particularly in Germany and Italy, indicators are also now pointing to a steady increase. In France, and now in the UK, the signs are for growth.
Among the major emerging economies, indicators for India, Russia, and China’s manufacturing sector also point to expansion at a steady pace, “but in Brazil they point to a slowdown in growth.”
The OECD reiterates that the indicators should be interpreted with care, as the shutdown measures caused by Covid-19 and vaccination campaigns’ progress are likely to generate larger than normal fluctuations in the components. For the OECD, the magnitude of the indicators should thus be taken as an indication of the signal’s strength rather than as a measure of the degree of growth in economic activity.
Source: Valor