Global economy stumbled at end of 2012

After the data released last week, it now appears that most of the major developed economies were unable to produce any economic growth in the fourth quarter of last year. However, things may have improved since then.

Last month, the United States Commerce Department had reported that the US economy contracted at an annual rate of 0.1 percent in the fourth quarter of 2012 after having grown at an annual rate of 3.1 percent in the third quarter.

Last week, Eurostat reported that the eurozone economy contracted by 0.6 percent in the fourth quarter, its third consecutive quarterly contraction and the biggest contraction since the first quarter of 2009.

Also last week, Japan's Cabinet Office reported that the Japanese economy contracted by 0.1 percent in the fourth quarter, also its third consecutive quarterly contraction.

However, the world's developed economies may have improved since. A report last week from the Organisation for Economic Co-operation and Development showed that the composite leading indicator for the OECD as a whole rose to 100.4 in December from 100.3 in November, its fourth consecutive monthly increase.

OECD composite leading indicators
	Ratio to trend, amplitude adjusted					Change from previous month
	2012					2012
	Aug	Sep	Oct	Nov	Dec	Aug	Sep	Oct	Nov	Dec
OECD area	100.1	100.1	100.2	100.3	100.4	-0.02	0.02	0.07	0.10	0.11
United States	100.5	100.6	100.8	100.9	101.0	0.04	0.11	0.14	0.14	0.14
Euro area	99.5	99.4	99.4	99.5	99.6	-0.08	-0.04	0.00	0.06	0.09
Japan	100.2	100.1	100.2	100.2	100.3	-0.08	-0.03	0.02	0.05	0.08

In its report, the OECD described the US composite leading indicator as pointing to “economic growth firming”. For the euro area, the OECD saw a “stabilisation in growth prospects”. And for Japan, the OECD said that “signs of growth picking up are emerging”.

So the global economy may have stumbled at the end of 2012 but it is probably already picking itself up.