After two months of relative stability, the Global Barometers weakened in June, reflecting the challenging recovery of the world economic activity in 2023. The decline was influenced by the deterioration of the economic environment in the Asia, Pacific & Africa region and in Europe.
The Coincident and the Leading Global Economic Barometers fall by 1.4 and 3.3 points to 83.9 and 91.7 points respectively in June 2023. This is due to a deterioration in both the assessment of the current situation and the expectations in the Asia, Pacific & Africa region and in Europe. After the indicators did stabilise over the previous two months, they are now moving away from the historical average of 100 points.
“The expectation of more robust recovery in the level of activity after lifting sanitary restrictions in China at the beginning of the year has been frustrated by the persistence of the challenges to the world economy. The impacts of the persistent inflationary process, the continuity of armed conflict in Europe, and credit restrictions resulting from problems in the North American banking sector are being felt in the performance of the Coincident Global Barometer. Moreover, this is also generating an expectation of additional slowdown in the second semester of the year, which explains the result of the Leading Barometer in June”, evaluates Paulo Picchetti, researcher of FGV IBRE.
Coincident Barometer – regions and sectors
In June, the Asia, Pacific & Africa region and Europe contribute negatively with -1.1 and -0.5 points, respectively, to the decline in the Coincident indicator, while the Western Hemisphere contributes positively with 0.2 points. The three indicators appear to continue to face headwinds, reflecting the ongoing weakness of the world economy, influenced by the impact of monetary tightening and uncertainty about the Chinese economic growth. The graph below shows the contribution of each region to the deviation of the Coincident Barometer from its historical average of 100 points.
All Coincident sector indicators fall this month, except for Construction, which, nevertheless, remains the lowest 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. As in the case of the Coincident Barometer, the Asia, Pacific & Africa region and Europe contribute negatively with -3.2 points and -1.3 points respectively, while the Western Hemisphere contributes in the opposite direction with 1.2 points. With two notable declines in a row, the Leading indicator for Europe is again the lowest among the regions. Overall, the level of the indicators points to sceptical expectations for economic activity in Europe and the Western Hemisphere, motivated by the inflationary environment and high interest rates, but moderated by economic growth in the Asia, Pacific & Africa region.
The Leading indicator sectors follow the same tendency as the Coincident sectors, with decreases in all sectors except Construction, which records an increase of 10.2 points for the month. The Economy (aggregated business and consumer evaluations) remains the highest among the sectors, while Services is the lowest, being the only indicator below 90 points.