`Green shoots' are the indicators of recovery in any economy. Macroeconomic indicators, which are closely related to the growth cycles of an economy, are often used to predict the growth trends of an economy. Despite the bleak global outlook, it is apparent that some leading indicators promise a recovery in the economic performance of the country soon. This article examines and identifies these green shoots and develops a credible forecast for the economy.

All market-based macroeconomic variables experience fluctuations in value. Very often, some of these macro variables show the existence of a relationship with the growth cycles of the economy. Such variables are then identified as indicators of the different phases of the growth cycles. There are three types of indicators – leading, coincidental and lagging. The leading indicators are so called, as they are used to predict changes in the growth pattern of the economy. The turning points in the leading indicators index are always ahead of the turning points in the business cycles. Typically, the business cycles are characterized by peaks and slumps. The time span between these two turning points is called a phase.

The global financial crisis has seen most developed economies suffer a long period of economic recession, which analysts expect will continue till 2010. There is ample speculation in the market regarding the depth of the recession and whether the worst has been reached as yet. Consumer confidence in the last six months has been low. While the Indian economy may have escaped a full-blown recession, slowdown was certainly visible in every sector of economic activity. The International Monetary Fund (IMF) lowered its growth prospects to 6.7%. Putting all myths of decoupling to rest, exports have slowed down. Yet India has been relatively less export dependent than many other Asian countries. Most analysts and economists are now in agreement that the signs of recovery are visible.

Global CEO Magazine, Macroeconomic Indicators, Global Financial Crisis, Economic Recession, International Monetary Fund, IMF, Global Economy, Organization for Economic Cooperation and Development, OECD, National Bureau of Economic Research, NBER, Indian Economy, Fiscal Policies, International Leading Indicators, Gross Domestic Product, Indian Council for Research on International Economic Relations, ICRIER.