2008 has shown how silly predictions can look. But some habits are hard to get rid of. So, here is a list of key economic/financial numbers to look out for in 2009, culled from research by HSBC and OECD. The HSBC lead indicator, incidentally, has helped track in advance the trends in industrial production and especially the downturn from early 2007.

The four early indicators the HSBC identifies are commercial vehicle sales, basic good output, credit-deposit growth and yield curve slope.

1. Commercial vehicles sales are important because producers and distributors make arrangements for transport of goods much before production picks up. Growth of sales of commercial vehicles in India has dropped from 33.3% in 2006-07 to 4.1% in 2007-08 and most recent numbers show that sales have fallen by 9.4% in April November 2008-09.

2. Trends in basic goods are important because they are adjusted first in anticipation of changes in final demand of both consumers and investors. Trends in basic goods production show that growth touched close to double digits in 2006-07 and then decelerated to 7% in 2007-08 after which it has further decelerated to 3.4% in the first seven months of 2008-09.

3. Growth in non- food credit relative to the increase in deposits and incremental credit deposit ratio also provides early signals of industrial growth. Current trends show that though the incremental credit deposit ratio has been picking up in 2008-09 the trends are much lower than in 2006-07. Moreover a substantial increase in external trade credit in recent months has bloated up the credit growth rates.

4. Yield rate trends show that a flattening curve is often associated with a future pick up in activity and vice versa for a steepening. Most recent numbers show that the yield curve has moved up rapidly, causing it to invert and push down profitability and investments. More rate cuts by RBI would hopefully reverse these trends.

To these four indicators one would add six other lead indicators identified by the OECD.

5. Intermediate goods production which peaked at 12.9% in 2006-07 decelerated to 7% in 2007-08 and has even begun falling in the last three months up to October 2008, causing output levels to stagnate in the current year.

6. The business confidence index brought out by the National Council of Applied Economic Research for the period July-December 2008 has seen a fall of 8.8% year-on-year and by 15.4% over the previous round.

7. Narrow money supply (m1), which includes currency with the public, demand deposits with the banks and other deposits with RBI and that has a lead time of five months in predicting changes, has seen growth stagnate on a year-on-year basis at 15.8%, according to the mid-term review of monetary policy by RBI.

8. Exchange rate, that also has an inverted relationship with growth trends, has a mean lead time of two months at peak turning points and a three-month lead time before the turning points in a tough.

9. Deposit interest rate in its inverted form is one of the best lead indicators with a median lead of seven months at turning points. The 8.5%-10% interest rate provided by the leading banks for deposits of more than one-year maturity in early December 2008 is still significantly much higher than the 8%-9% rate given just a year back.

10. Import numbers are another leading indicator, especially non-oil imports, that has an equally large lead time of five months at both turning points. Non-oil imports have grown by a robust 28% in April-October 2008 but have slumped to 5%, according to figures from last month.

p.raghavan@expressindia.com