Leadership

Trichet: turning point for global economy

11.05.2009
The President of the European Central Bank (ECB), Jean-Claude Trichet (pictured), has said there are now signs that the global economy has reached a turning point, with indicators released by the Organisation for Economic Cooperation and Development (OECD) today showing that a number of the world’s economies are showing signs of slight improvement.

“We are, as far as growth is concerned, around the inflection point in the cycle,” Trichet (pictured) said at the bi-monthly meeting of global central bankers at the Bank for International Settlements in Basel, Switzerland, the Wall Street Journal has reported.

While he noted that there had been a “substantial improvement” in the markets since mid-September of last year, Trichet warned against an overly optimistic view of recent indications of global recovery.

“We have to remain very alert. We are still in uncharted waters,” he said.

The OECD’s composite leading indicator (CLIs) for March still show signs of a strong slowdown in OECD countries. However, according to the organisation,France, Italy and the UK are showing “tentative signs of, at least, a pause in the economic slowdown”.

“Weak though these signals are, they are present in the majority of the CLI component series for these countries,” the OECD noted.

The CLIs attempt to indicate turning points in economic activity approximately six months in advance.

In other major OECD economies, the CLIs continue to point to deterioration in the business cycle, but at a decreasing rate.

However, with the exception of China, where signs of a pause have also emerged, major non-OECD economies “still face deteriorating conditions”, the organisation said, indicating that full economic recovery is still a considerable way off.

The CLI for the OECD area showed signs of a slowdown in decline, decreasing by 0.1 points in March 2009, although it was still 9.5 points lower than in March 2008.

The CLI for the United Kingdom showed a slight improvement, increasing by 0.3 points in March 2009, with China’s CLI also improving as it increased by 0.9 points in March 2009. However, even with this positive shift, China’s CLI in March was still 9.5 points lower than a year ago.

The CLI for the US fell by 0.6 point in March and was 11.8 points lower than a year ago, with the Euro area’s CLI increasing by 0.2 points in March, but still standing 7.9 points lower than a year ago.

In March, the CLI for Japan decreased by 1.0 point, and was 12.3 points lower than a year ago.