SINGAPORE (Aug 20): There are clear signs of an economic slowdown across the world and things could get worse. Several forward-looking indicators are foreshadowing a moderation in growth in production and trade for the rest of the year. Adding to the woes are ill-tempered negotiations over trade spats, which are likely to get worse. As a result, business confidence has already been hurt and actual exports and production could follow. A number of large emerging economies such as Turkey and Argentina are under severe stress — more countries could join them in the coming months. Finally, we could be getting to the point where geopolitical frictions escalate and damage the world economy.
Global economy is poised to slow down
The composite lead indicator devised by the Organisation for Economic Co-operation and Development has been edging down in the past few months and is now below its long-term average. Since the track record of this indicator in predicting growth is good, that means growth in the OECD club of rich nations is likely to slow in the next six to 12 months. This is particularly the case for Europe and Japan while the outlook for the US remains strong.