COMPOSITE leading indicators (CLIs) point to a significant improvement from the unprecedented slowdown reached at the height of the current crisis in April but the recovery remains fragile, as uncertainty persists around the possibility of future lockdowns.

CLIs rebounded strongly in most OECD large economies, as restrictions related to Covid-19 have gradually eased and uncertainty reduced, but they remain below the levels recorded prior to the coronavirus outbreak and well below long-term trends.

Similar patterns are visible among major emerging economies, with the CLI in China in particular, where the crisis hit first, returning above pre-crisis levels, albeit below long-term trends. However, in India, the CLI remains close to the crisis low.

However, it should be noted that, in the current circumstances, the CLIs should be interpreted with care as considerable uncertainty surrounding the impact of current lockdowns and transitions out of lockdowns remains. As always, the magnitude of the CLI decline should not be regarded as a measure of the degree of contraction in economic activity, but rather as an indication of the strength of the signal.