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OECD follows IMF with concern about eurozone outlook


[PARIS] The OECD pointed to a weak outlook for growth in the eurozone, particularly in Germany, on Wednesday when its index of leading economic indicators pointed to stable growth elsewhere.

This latest signal of gloom for the eurozone came the day after the International Monetary lowered its forecast for growth in the 18-member single currency area.

"In Europe, signs are emerging of a loss of growth momentum in the Euro area," the Organisation for Economic Cooperation and Development said.

Its latest composite leading indicators, CLIs, which it calculates monthly to show trends in economic activity, point to a slowdown in momentum in Germany and Italy, with France stable.

On Tuesday, the IMF cut sharply its eurozone growth forecast to 0.8 per cent and warned that the single currency bloc faces a long period of sluggish activity and dangerously low inflation which the European Central Bank must tackle.

And earlier this week Germany reported a 5.7-per cent slump in August factory orders and a 4.0 per cent drop in industrial output, which analysts said meant there would likely be little rebound from the 0.2 per cent contraction posted in the second quarter.

The OECD's CLI for Germany began dropping earlier this year and in August, the last month calculated, fell below the long-term average of 100 points, dropping from 100.1 to 99.7 points.

The OECD said its CLIs pointed to stable growth momentum for the United States, Britain and Canada, as well as in emerging markets Brazil, China and Russia.

It said Japan's CLI points to a loss of momentum, but that this may be due to one-off factors.

India's CLI points to accelerating growth momentum, but is still below the long-term trend.

The OECD indicators are regarded as a reliable pointer to how the trend of activity will evolve, and are closely watched for this reason.-AFP