After a noticeable drop during the second semester of 2021, the Global Economic Barometers remain relatively stable in December compared to the previous month. The Coincident Barometer discontinues a sequence of decreases that began in July, while the Leading Barometer records its seventh successive, albeit modest, decrease, thereby remaining below its long-run average of 100 points and exposing the difficulties in maintaining the rate of recovery of the world economy.
The Coincident Global Economic Barometer rises 0.5 points in December to 107.1 points. The Leading Global Economic Barometer decreases 0.4 points, to 95.7 points, the lowest level since July 2020 (83.2 points). The positive Coincident Barometer result is being determined exclusively by Europe, whereas the negative Leading Barometer result is based on developments in Asia, Pacific, and Africa and the Western Hemisphere.
“While the advance of the Coincident Barometer demonstrates stability in the level of activity in most regions at the end of 2021, the new negative result for the Leading Barometer incorporates the effects of the increased uncertainty in relation to the immediate future. Despite the extent of the threat posed by the new variant of Coronavirus not yet being completely known, new restrictions on mobility are already being adopted in some places. This may delay the resolution of problems in the supply chains, whose pressures on prices are already widespread, resulting in signs of restrictive monetary policy in various countries”, evaluates Paulo Picchetti, researcher of FGV IBRE.
Coincident Barometer – regions and sectors
Europe is the only region to record an overall positive development in its Coincident Barometer in December. The indicators for the other regions remain stable. All the regions continue to record indicators above the long-run average of 100 points. The 2nd graph in the Press Release illustrates the contribution of each region to the deviation of the Coincident Barometer from this historical average.
Among the sector indicators, only Industry and Trade rise in December, while the other sectors record decreases. With this result, the Trade indicator became the highest among the sector indicators for the first time since October 2019.
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. The leading indicators for the Asia, Pacific, and Africa and the Western Hemisphere regions contribute negatively to the development in the global indicator (-0.4 points), with -0.5 and -0.4 points, respectively. Europe is the only region to contribute positively, with 0.5 points. All the regions record levels below 100 points in December 2021.
Three of the five sectorial indicators are declining in December: Services, Construction, and Industry. The indicators for Trade and the general state of the Economy (aggregated business and consumer evaluations) are rising. With these results, Trade remains the most optimistic sector in the short term. Construction and Services record levels that reflect moderation, while Industry and Economy remain below the historical average of 100 points, signalling a weakening tendency.