The OECD’s economic forecast for South Korea has declined for the 15th consecutive month. On August 12, the OECD lowered its composite leading indicator (CLI) for South Korea for June this year by 0.3 points from the previous month to 99.2.
The CLI is an index for predicting economic conditions six to nine months ahead. The OECD calculates the index for South Korea by using the six indicators consisting of the manufacturing inventory index, long- and short-term interest rate difference, export-import price ratio, manufacturing business survey index, capital goods inventory, and KOSPI.
South Korea’s CLI has continued to decline from the peak of 100.98 recorded in March last year. The back-to-back decline for 15 months in a row is second only to that from September 1999 to April 2001, which immediately followed the foreign exchange crisis at that time. Besides, the pace of decline is accelerating. The indicator fell by 0.1 point a month until February this year, but the decrement rose to 0.2 points in March, when the indicator reached 99.93. In June, the decrement rose again to 0.3 points.
A decline in CLI is not limited to South Korea. The average CLI of OECD member countries, which reached a peak of 100.23 in November 2017, has fallen for the seventh consecutive month since then, remaining below 100 from April to June. Likewise, the CLI of G7 countries has dropped for six months in a row since December 2017.