The Global Barometers decline and reinforce normalization tendency in the first quarter of 2022

The Global Barometers decline and reinforce normalization tendency in the first quarter of 2022

The Global Economic Barometers are dropping more sharply in March. This partly reflects the normalization of the global economy at the beginning of 2022 and is largely driven by changed assessments in Asia. The coincident indicator remains relatively strong, but the distancing of the leading indicator from the historical mean of 100 points may be a first sign of a stronger deceleration than previously forecast for the coming months. 

The Coincident Global Economic Barometer falls 3.3 points in March to 103.9 points, the lowest level since March 2021 (100.9 pts), while the Leading Global Economic Barometer decreases 2.7 points, to 96.4 points, the lowest level since July 2020 (80.8 pts). The result of both barometers was strongly influenced by the Asia, Pacific, and Africa region. The data on which the barometers are based are mostly from the period before the outbreak of war in Ukraine. Therefore, this war and the further economic escalation, including renewed price increases for energy commodities, should only be included in the current results to a very limited extent.

The price increases spreading around the world and their effects on monetary policy decisions are already the main challenge to maintaining the rate of recovery in economic activity since the cooling off of social distancing measures. The immediate impact of the conflict in the Ukraine is already being felt in additional price increases among the main commodities, significantly increasing the uncertainty surrounding the development of economic activity across all sectors and regions.”, evaluates Paulo Picchetti, researcher of FGV IBRE.

Coincident Barometer – regions and sectors

In March, the Asia, Pacific, and Africa region contributes -3.0 points (93%), to drop in the Coincident Global Barometer. The Western Hemisphere contributes -0.3 points, while Europe´s indicator remains stable this month. The regional indicator for Europe, at a level of 112 points, remains the highest among the three regions. The 2nd graph in the Press Release illustrates the contribution of each region to the deviation of the Coincident Barometer from the historical average of 100 points.

Four of the five coincident sector indicators decrease this month, with Industry and Construction standing out with marginal losses of almost 7.0 points. In the opposite direction, the indicator for Trade records its highest level since May 2021. With this result, the indicator reached 117 points and is the highest among all sectors.

Leading Barometer – regions and sectors

The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. The Asia, Pacific and Africa region is the only region to contribute negatively to the development of the Leading Barometer in March 2022, with -4.1 points. The Western Hemisphere contributes positively, with 0.9 points, followed by Europe with 0.5 points. 

In March 2022, except for Industry, all leading sector indicators decline. Construction records its lowest level since July 2020 (77.9 pts), while the Services sector remains at the opposite side with an indicator still above 100 points.