The Global Economic Barometers increase considerably in March, also reflecting the initial success in vaccination programs in some countries and optimism regarding the possibility of achieving control over the pandemic in the coming months. However, the results are still heterogeneous among regions.
The Coincident Global Barometer rises by 4.5 points in March, from 97.9 points to 102.4 points, reaching its highest level since December 2017. The Leading Global Barometer climbs 11.9 points, to 117.1 points, its highest level since June 2010. Since September 2020, this indicator has remained at a high level, in the range between 104 and 117 points, with fluctuations reflecting alterations in the degree of optimism regarding immunization programs and the difficulties in gaining control over the pandemic in different countries. The Asia, Pacific and Africa region is responsible for almost all of the rise in the global coincident barometer. Within the leading barometer, the Western Hemisphere is moving in the opposite direction to the other regions, contributing negatively to the aggregate result.
“The combination of the effect of restrictive measures and immunization has produced results in terms of reduction in the pandemic rates of contagion, albeit not homogenously around the world. In the countries in which these results are more evident, indicators of current and expected activity levels in relation to the coming months have enabled advances in the Coincident Barometers and expectations have provided increases in the Coincident and Leading Barometers in March, persisting despite a relatively worse result for the services sector. The offer of vaccines continues to be the main determinant of the potential for a more robust recovery across all the regions and sectors. From the point of view of economic policy, another determinant for this recovery is the capacity for the continuity of stimulus measures, in the context of a worsening of the fiscal situation and concerns related to the inflationary dynamic in various countries”, evaluates Paulo Picchetti, researcher of FGV IBRE.
Coincident Barometer – regions and sectors
All the regions contribute positively to the aggregate result this month, especially the Asia, Pacific and Africa region, which contributes 4.3 points, or 96%, to the rise in the Coincident Global Barometer, while the Western Hemisphere and Europe contribute only 0.1 points each. Europe is the region recovering most slowly, followed by the Western Hemisphere, reflecting uncertainty there about pandemic control and the speed of vaccination campaigns. The graph below illustrates the contribution of each region to the deviation of the Coincident Barometer from the historical average of 100 points.
The largest positive contribution comes from Industry, followed by the set of variables reflecting the aggregated development of economies (Overall Economic Development). These two are also the only sectorial aggregation levels with indicators already above the long-run average level of 100 points. Among the five sectors, only retail and wholesale Trade contributes negatively to the aggregate result, while the remaining sectors record an increase for the month.
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. As with the Coincident Barometer, the Asia, Pacific and Africa region stands out in March, contributing 9.4 points, almost 80%, to the rise in the aggregate indicator. Europe also contributes positively this month, with 2.9 points, while the Western Hemisphere moves in the opposite direction to the other regions, contributing negatively by 0.4 points.
All the Leading Barometer sectors increase this month, influenced by the continuity of vaccination campaigns around the world and the possibility of a return to economic normality in the following months. The set of variables reflecting the aggregated development of economies (Overall Economic Development) and Industry remain the most optimistic sectors (with 123.3 and 117.3 points, respectively). The set of variables reflecting Services rises this month, above its long-term average. Compared to the other sectors, however, the outlook is rather cautiously optimistic.
In March, all the Leading sectorial Barometers contribute positively to the aggregate result. Industry and the set of variables reflecting the aggregated development of economies (Overall Economic Development) contribute 5.1 and 4.0 points, respectively. The other sectors contribute more modestly to the aggregate result.