The Global Barometers continue to signal a pronounced world economic slowdown at the beginning of 2023. Both indicators record a fall for the month and reach levels which – excluding the worst period of the COVID-19 crisis – have not been seen since 2009. The latest results are particularly depressed by developments of the indicators in the Asia, Pacific & Africa region.
In January 2023, the Coincident Global Economic Barometer falls 3.3 points to 76.5 points, the lowest level since July 2020 (68.5 points), while the Leading Global Economic Barometer drops 2.1 points to 79.6, the lowest level since June 2020 (59.6 points). With this result, the Coincident Barometer is below the level of the Leading Barometer for the second month in a row. The decrease in the two indicators was mainly caused by the worsening of the economic environment in the Asia, Pacific & Africa region, while the results for the other regions show a slight positive movement.
“The persistent inflationary process around the world at the beginning of this year reinforces the expectation that the cycle of monetary tightening begun in 2022 will last even longer. The resulting slowdown in the level of activities is the cost of the deflation process, as captured by the Coincident Barometer, which will also be the case for the coming months, as reflected in the expectations behind the calculation of the Leading Barometer”, evaluates Paulo Picchetti, researcher of FGV IBRE.
Coincident Barometer – regions and sectors
In January, the Asia, Pacific & Africa region contributes negatively to the Coincident indicator with -3.6 points, while Europe and the Western Hemisphere contribute in the opposite direction with 0.2 and 0.1 points, respectively. The strong decrease in the Asia, Pacific & Africa region reflects the dramatic Covid-19 situation in China and its economic and social impacts. The continued low levels of the regional indicators constitute an adverse scenario for economic growth at the beginning of 2023. The graph below 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, Services, Industry, and the Economy (aggregated business and consumer evaluations) decrease this month, while Trade and Construction move in the opposite direction. All the sector indicators remain far from the historic mean of 100 points and suggest an economic slowdown spread across the sectors.
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. For the second consecutive month, only the Asia, Pacific & Africa region contributes negatively to the fall in the indicator, with -3.8 points. In contrast, the Western Hemisphere and Europe have gained 1.0 and 0.7 points, respectively. All levels of the indicators point to a continued scenario of pessimism for these economies for the coming months, with the Asia, Pacific & Africa region showing the lowest level among the regions, which has not occurred since June 2022.
Among the Leading indicator sectors, Industry, Trade, and Construction decrease in January, while the Economy and Services move in a positive direction. With this result the indicators also signal a pessimistic outlook for the coming months spread across the sectors.