The Global Barometers overall continue to signal a strong deceleration in world economic growth in 2022. In July, the Coincident Barometer declines for the sixth consecutive month, while the Leading Barometer continues to be 10 points below the historical mean of 100 points. The results reflect a gloomy outlook for global economic growth in the coming months.
The Coincident Global Economic Barometer declines 2.5 points in July, to 91.5 points, accumulating losses of almost 20 points since last February, while the Leading Global Economic Barometer remains stable this month at 86.2 points. The decrease in the coincident indicator is influenced by renewed worsening of conditions in the Western Hemisphere, followed by Europe.
“The performance of the global barometers in July reflects the challenges to maintaining the level of activities across almost all regions and sectors in the coming months. While monetary authorities around the world act to contain the generalized price increases, on the supply side, the continuing restrictions imposed by supply-chain problems mean the measures to contain demand will need to be more far-reaching,” evaluates Paulo Picchetti, researcher of FGV IBRE.
Coincident Barometer – regions and sectors
In July, the Western Hemisphere and Europe contribute negatively 1.5 and 1.1 points, respectively, to the decrease in the Coincident Global Barometer, while the Asia, Pacific, and Africa region remained relative stable with small positive contribution of 0.1 points. The drop in the global indicator is at least partly caused by the additional supply restrictions related to the Russian-Ukrainian War. The gradual recovery of the Chinese economy, after easing the mobility restrictions adopted to combat an outbreak of Covid-19, may have positively influenced the Asia, Pacific, and Africa region slightly for the second consecutive month. Nevertheless, the region remains responsible for more than half of the 39.2-point fall in the global indicator during the previous 12 months. The 2nd graph in the press release illustrates the contribution of each region to the deviation of the Coincident Barometer from the historical mean of 100 points.
Among the coincident sector indicators, only the Services sector increases this month. All the remaining sectors decrease, especially Trade, with a fall of 8.5 points. With this result, all the indicators move further below the historical mean of 100 points. The Construction sector records its lowest level since July 2020 (64.7 pts.)
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. In July, the global indicator remains stable at 86.2 points. As with the Coincident Barometer, the Western Hemisphere and Europe contribute negatively to the Leading Barometer result. In contrast, the Asia, Pacific, and Africa region moves in the opposite direction, partially compensating the more noticeably decreases of previous months by contributing 1.7 points to the development of the Leading Barometer. Global growth expectations for 2022 have been worsening as a result of continuing conflict between Ukraine and Russia and the adoption of more restrictive monetary policies in various countries. These factors have contributed to keeping the global indicator below the long-term average.
Three of the five leading indicator sectors decrease in July. Only the indicators for the general state of the Economy (aggregated business and consumer evaluations) and Industry increase this month. All indicators remain far below the historical mean of 100 points.