The Global Barometers are quite stable in June, following noticeable falls in the two previous months. The Coincident Barometer rises a little and sustains a level compatible with moderate growth of the world economy in the second quarter. However, the current stability of the Leading Barometer continues to reflect a skeptical outlook for global economic growth in the months ahead.
The Coincident Global Economic Barometer climbs 0.9 points in June to 94.1 points, after losing 11.4 points during April and May. The Leading Global Economic Barometer remains stable this month at 82.2 points. The results of the indicators are influenced by the improvement in current assessments and the outlook for the coming months in the Asia, Pacific, and Africa region alongside a worsening of perceptions in the other regions.
“The development of the Global Barometers in June demonstrates the continuity of a framework in which monetary authorities around the world clearly signal their will to fight against generalized price increases, even those resulting primarily from shocks to supply. The magnitude of the resulting slowdown in economic activity remains uncertain, depending on the dynamic of the conflict in Europe and the relaxing of recent mobility restriction measures, especially in Asia”, evaluates Paulo Picchetti, researcher of FGV IBRE.
Coincident Barometer – regions and sectors
In June, the Asia, Pacific, and Africa region was with 2.3 points the only region to contribute positively to the increase in the Coincident Global Barometer. The indicator for Europe contributes -0.9 points and the Western Hemisphere contributes -0.5 points. The gradual rise in the global indicator appears to be mainly related to the gradual recovery of the Chinese economy after the easing of mobility restrictions adopted to combat the COVID-19 outbreak. The 2nd graph in the press release illustrates the contribution of each region to the deviation of the Coincident Barometer from the historical mean of 100 points.
Among the coincident sector indicators, only Industry and the general state of the Economy (aggregated business and consumer evaluations) increase slightly this month. The other sectors all decrease. All five sector indicators remain below the historical mean of 100 points and Construction continues to be the sector with the lowest level.
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. In June, the global indicator remains at 82.2 points, the lowest level since April 2009, except for four observations in 2020. The Asia, Pacific, and Africa region contributes positively this month with 1.6 points, while Europe and the Western Hemisphere contribute in the opposite direction with -1.1 and -0.5 points, respectively. The economic slowdown to control the pandemic in China, alongside the war in Ukraine, the high inflation rates and the adoption of more restrictive monetary policies in various countries has led to a worsening of expectations for global growth in 2022. The latter factors also contribute to maintaining the low level of the global leading indicator.
In June 2022, there is a fall in four of the five leading indicator sectors. Only the indicator for the general state of the Economy (aggregated business and consumer evaluations) increases this month. Despite the rise, it is the only indicator oscillating in the band of 70 points. All the other sector indicators are in the band of 80 points.