According to Yonhap News,

(Sejong=Yonhap News) Reporter Lee Dae-hee = South Korea's Composite Leading Indicator (CLI) published by the Organisation for Economic Co-operation and Development (OECD) rose for the 19th consecutive month, recording the highest level globally last month.

This signals that S. Korea's Gross Domestic Product (GDP) level 6 to 9 months ahead will strongly exceed its long-term trend, with growth momentum likely outstripping trend growth rates.

However, as the CLI's month-on-month growth increment has gradually narrowed since March, and amid emerging headwinds such as surging international crude oil prices and government bond yields triggered by escalating Middle East conflicts, concerns are rising that the economic expansion pace may slow down.

◇ From Bottom to 1st Place in One Year… Statistics Korea Indicator Hits Highest Level in 25 Years and 11 Months According to the OECD on the 13th, S. Korea's CLI reached 102.87 last month, marking its highest level in 5 years and 3 months since May 2021 (102.88).

The OECD CLI is designed to detect macroeconomic turning points early, serving to estimate economic trends 6 to 9 months in advance. A reading above the baseline of 100 indicates that future GDP levels will exceed long-term trends, while a reading below 100 suggests performance under the trend.

S. Korea's CLI declined through January last year (99.14) before initiating a rebound in February, crossing the baseline to reach 100.12 in November.

The August CLI level ranked 1st among the 17 countries disclosed by the OECD. This marks the first time S. Korea secured 1st place in 6 years and 3 months, since May 2020 (99.46).

While ranking near the bottom at 16th place out of 17 countries as late as September last year, the index rose rapidly to enter 3rd place in February this year, surpassed Mexico to claim 2nd place in July, and overtook Brazil last month after the latter held the top spot for 8 months.

The Cyclical Component of the Composite Leading Index published by Statistics Korea showed a similar trend. Rising for 9 consecutive months, it reached 104.2 in July, marking the highest figure in 25 years and 11 months since August 2000 (104.6).

The OECD CLI comprises 6 constituent metrics: manufacturing business outlook, stock prices, inventory of investment goods, inventory-to-shipment ratio, long-short interest rate spreads, and terms of trade.

The primary driver bolstering South Korea's index is identified as the improvement in terms of trade driven by the semiconductor boom. Terms of trade represent the ratio of export prices divided by import prices.

Suk Byung-hoon, Professor of Economics at Ewha Womans University, explained, "Oil prices account for the largest share of imports while semiconductors dominate exports; because semiconductor prices surged much faster than oil prices, terms of trade improved significantly."

Last month's exports increased by 68.7 percent year-on-year, propelled by expanded shipments of semiconductors, computers, and cosmetics.

Yang Jun-sok, Professor of Economics at Catholic University of Korea, noted, "The strong CLI readings are ultimately attributable to semiconductors. While the U.S. looks resilient due to AI data center construction, Europe and Japan lack even that catalyst, making high readings difficult for them. S. Korea claiming 1st place is not a surprising statistical outcome."

◇ Growth Pace Moderates for 5th Month…"Approaching Peak" vs. "High Baseline Effect" The key concern lies in the slowing growth momentum of these predictive indicators.

The month-on-month increase in South Korea's OECD CLI narrowed for 5 consecutive months, peaking at 0.43 points(p) in March before decelerating to 0.41p in April, 0.37p in May, 0.28p in June, 0.15p in July, and 0.06p last month.

The month-on-month gain in Statistics Korea's cyclical component also narrowed from 0.9p in June to 0.4p in July.

External headwinds are compounding simultaneously.

International oil prices surged past USD 100 per barrel due to intensifying conflicts in the Middle East.

Concerns over U.S. inflation spiked expectations of Federal Reserve rate hikes, driving U.S. Treasury yields upward. Domestic bond yields subsequently surged, with the 3-year Treasury bond yield exceeding 4.0 percent on the 11th for the first time since November 2023, while 10-year Treasury yields touched their highest level since October 2022.

With the Bank of Korea executing two consecutive benchmark rate hikes, corporate financing costs and household interest burdens are expected to escalate.

Synthesizing these conditions, analysts express concern that the speed of economic expansion may gradually moderate, potentially transitioning into a cyclical slowdown.

Professor Seok noted, "In leading indicators, a decelerating expansion rate suggests proximity to a peak. If worsening terms of trade follow rising oil prices, the CLI's upward momentum is highly likely to slow further. Deteriorating terms of trade could bring forward the macro peak, leading S. Korea's real economy to peak shortly thereafter."

Professor Yang uated, "While it is premature to conclude we have reached the peak, a peak could arrive soon. If U.S. AI data center expansion accelerates, semiconductor strength could sustain the economy; otherwise, the peak may already have passed."

Conversely, the government maintains that emphasis should be placed on the high absolute level of the leading indicators, asserting that moderating growth increments should not be interpreted as a downturn signal.

In its September 'Recent Economic Trends' report (Green Book) released on the 11th, the Ministry of Economy and Finance (MOEF) stated, "A robust economic recovery trend continues to manifest."

A MOEF official emphasized, "Whether measured by OECD or Statistics Korea standards, leading indicators remain at exceptionally high levels, standing overwhelmingly strong compared to major economies. It is improper to interpret a narrowing month-on-month increase as an impending economic downturn when the index significantly exceeds 100."

The official added, "Because the index is anchored at a high baseline, it is appropriate to interpret this as a continuation of sound and robust growth. While external uncertainties have undoubtedly expanded regarding oil prices and U.S. Treasury yields, there is a time lag before they impact the real economy. We will closely monitor these expanding uncertainties."

2vs2@yna.co.kr



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Source Text

Source: Yonhap News (September 13, 2026)

** This article was translated from Korean.