Major economies show strong signs of economic recovery: OECD

Major global economies are showing strong signals of continuing economic recovery, led by Italy, France, the UK, and China while tentative signs of growth are visible in Canada and Germany, the Organisation for Economic Cooperation and Development (OECD) said in its latest report released on Friday.

Paris-based economy watchdog said that its composite leading indicators (CLIs) for September 2009 point to clear recoveries in the US, Japan and other OECD economies and major non-OECD economies. OECD data covers 29 industrialised member countries and 6 non-member developing economies.

Nevertheless, OECD warned that the results have to be treated with caution.

''Although expansion signals can be observed in several countries, these signals should be interpreted with caution, as the expected improvement in economic activity, relative to long term potential levels, can be partly attributed to a decrease in the estimated long term potential level and not solely an improvement in economic activity itself,'' the report said.

CLI, which is considered as an authentic indicator of global economic outlook, increased by 1.3 point in September to 100.6 for the OECD nations, registering a 3.4 point growth compared with September 2008. The indicator has been on the rise since it touched its lowest point of 92.6 in February, crossing the 100 mark for the first time in 14 months. The CLI started dropping below 100 in last July in the wake of the global financial crisis, indicating an economic slowdown.

The CLI is computed based on a wide range of parameters of the economic activity in respect of each country. It is intended to signal turning points of business cycles-peaks and troughs-and have had a good track record of depicting qualitative information on short-term economic movements around its long term potential level of 100.