Global Barometers: world slowdown continues

The Global Barometers continue to signal a clear world economic slowdown at the end of 2022. After a second successive fall, both indicators reach levels which – apart from the worst period of the COVID-19 crisis – have not been seen since the financial crisis in 2008/2009. 

In December 2022, the Coincident Global Economic Barometer falls 3.7 points to 80.2 points, while the Leading Global Economic Barometer drops 2.3 points to 81.8. The decline in both indicators was mainly driven by the worsening of the economic environment in the Asia, Pacific & Africa region. 

“Despite the cooling of the supply chain problems caused by the pandemic, price increases have become generalized with the contribution of shocks to energy prices and pressures on labour markets in most countries. The perception of the need for a sufficiently long cycle of restrictive monetary policy to bring prices back to pre-pandemic levels is reflected in the results of the global barometers, which signal a strong slowdown in economic activity over the coming months.”, evaluates Paulo Picchetti, researcher of FGV IBRE.

Coincident Barometer – regions and sectors

In December, the Asia, Pacific & Africa region contributes 3.5 points to the 3.7-point decrease in the Coincident indicator, while the Western Hemisphere contributes -0.3 points and Europe +0.1 point.  The sharp decline in the Asia, Pacific & Africa region reflects, among other things, the consequences of the restrictions related to the ‘Zero Covid’ policy in China, which has led to a wave of protests. The continued low levels of the regional indicators constitute a negative scenario for economic growth for the coming months. The graph below 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, the Economy (aggregated business and consumer evaluations), Industry, and Trade decrease this month, while Services and Construction move in the opposite direction. All the sectorial indicators end 2022 far from the historic mean of 100 points and signal an economic slowdown spread across 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. In December, only the Asia, Pacific & Africa region causes a further decline in the indicator, with -4.0 points. In contrast, the Western Hemisphere and Europe contribute positively with 1.6 and 0.1 points, respectively. The levels of the indicators nevertheless suggest an unfavorable development in the coming monthsAmong the sectors, only the Services leading indicator does not decrease in December. All sectoral indicators signal a pessimistic outlook for the coming months.