The Coincident Global Economic Barometer increases by 0.3 points in May, while the Leading Barometer gains 1.6 points, reaching 93.5 points and 102.8 points, respectively. The slight rise in the Coincident Barometer is mainly due to the improvement in Europe, while the increase in the Leading barometer is driven by rises in the Western Hemisphere and the Asia, Pacific & Africa regions.
“The increases in the Coincident and Leading Global Barometers in May corroborate the scenario of moderate, but better than predicted, growth for the world economy in 2024, with demonstrations of resilience from the developed economies, especially that of the USA, and in developing countries. The labour market continues to show good results leading to a postponement of interest rates cuts in various countries. Although risks remain on the geopolitical, inflationary, and fiscal fronts, the outlook of a soft landing for the world economy is increasingly more likely. The growth forecasts have been revised upwards by organs like the OCDE, which now projects world growth of 3.1% for 2024 and 3.2% in 2025.”, evaluates Aloisio Campelo Jr., researcher of FGV IBRE.
Coincident Barometer – regions and sectors
The slight increase in the Coincident Barometer in May is the result of positive contributions from Europe and the Asia, Pacific & Africa region of 0.2 and 0.1 points, respectively, and a zero contribution from the Western Hemisphere. Since its peak in January, the indicator for the Asia, Pacific & Africa region has shown some volatility, but overall it has declined slightly. In contrast, the indicators for the Western Hemisphere and Europe have been more consistent over the same period. The former has recorded five consecutive increases and is at a higher level than the other regions. All the regional coincident indicators continue to fluctuate within the 90-100 point range, signalling a moderate level of global economic activity. The graph below shows the contribution of each region to the deviation of the Coincident Barometer from its historical average of 100 points.
The development of the Coincident sector indicators in May is heterogeneous, with increases in Construction, Industry and Services, and decreases in Economy (aggregated business and consumer evaluations), and Trade. With these results, Industry remains at the highest level among the sectors and Construction at the lowest.
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by an average of three to six months. In May, the Asia, Pacific & Africa region and the Western Hemisphere contribute 1.3 and 0.7 points, respectively, to the increase in the global indicator, while Europe records a negative contribution of -0.4 points. The indicator for the Asia, Pacific & Africa region makes gains for the second consecutive month, approaching 102 points and the indicators for the other regions. This reflects a degree of optimism well below the peak of almost 117 points reached by the same indicator in January 2024.
In May, among the Leading sector indicators, those for Economy (aggregated business and consumer evaluations), Services, and Construction increase. However, the indicator for Trade returns to a downward movement, while the indicator for Industry remains relatively stable, with a slight negative change.