Chart: OECD Leading Indicators – EM vs DM

The latest update to the OECD Composite Leading Indicators (CLI) provides the opportunity to take a look at the weighted average view for Emerging Markets vs Developed Markets (I have calculated these aggregates based on IMF GDP data).

The main point is that judging by the OECD CLIs developed economies are rolling over (and it’s much more pronounced if you look at DM ex-US), meanwhile emerging markets are still improving from a cyclical standpoint. The OECD notes that the CLIs are “designed to anticipate turning points in economic activity” so it’s worth keeping an eye on these indicators, particularly when you see what’s unfolding in EM vs DM. Given that emerging economies now account for the dominant share of global GDP, it’s worth pondering whether EM can offset the softer economic momentum in DM, particularly as US dollar strength puts emerging markets under pressure.