In September, the Global Economic Barometers maintain their weakening tendency that started in July, reflecting the slowdown in world economic growth in the second half of 2021. Despite the fall, the indicator levels remain high and compatible with the continuity of the current phase of recovery of the world economy.
The Coincident Global Barometer decreases by 6.3 points in September to 111.8 points. The Leading Global Barometer falls 7.2 points, to 105.1 points. All the investigated regions developed negatively in September, with larger losses in the Asia, Pacific and Africa region for the Coincident Barometer and in Europe for the Leading Barometer.
“The recovery of the world´s economic activity has been fostered by the advance in immunization and the relaxation of restrictive measures on mobility. However, this recovery has advanced amid persistent problems related to the supply chains of various raw materials, transforming part of the increase in demand into higher prices across all regions and sectors. The slowdowns observed in the coincident and leading barometers reflect the issues connected to these supply restrictions, and the economic policy alternatives for dealing with generalised price increases”, comments Paulo Picchetti, researcher at FGV IBRE.
Coincident Barometer – regions and sectors
The Asia, Pacific and Africa region contributes the most (-3.9 points) to the fall in the Coincident Global Barometer, followed by Europe and the Western Hemisphere, with negative contributions of 1.3 and 1.1 points, respectively. However, all regions continue to show indicators above the historical average of 100 points. The graph in the Press Release illustrates the contribution of each region to the deviation of the Coincident Barometer from this long-run average.
All five of the studied sectors contribute negatively to the aggregate result of the Coincident Barometer in September. The indicator that measures the aggregated development of economies (Economy) make the strongest contribution to the fall this month, followed by Industry and Trade. The negative contributions of the other three sectors are somewhat more modest. The indicator for the Services sector decreases for the third consecutive month, albeit at a slower rate, and continues to record the highest level among 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. The leading indicators of the three regions contribute negatively to the result of the Leading Barometer in September. Europe contributes -3.7 points to the fall, followed by the Asia, Pacific and Africa region with -2.3 points, and the Western Hemisphere with a negative contribution of 1.2 points. Europe, which was the most optimistic region last month, is now the only region, by recording 99.9 points, to have fallen back to its long-run average. The other two regions remain above this level.
All the Leading Barometer sectors decline in September, with the strongest contributions to the aggregate result coming from Industry and the indicator that measures the aggregated development of economies (Economy). The other sectors contribute modestly to the final result. With this month’s decrease, Economy records a level below 100 points for the first time since July 2020, while the Construction, Services, and Trade sectors continue to record levels that reflect an above-average growth outlook.