Global Economic Barometers maintain the weakening tendency that started in July

Global Economic Barometers maintain the weakening tendency that started in July

In October, the Global Economic Barometers maintain the weakening tendency that started in July, reflecting the slowdown in World economic growth in the second half of 2021. The more intense fall of the Leading Barometer suggests a possible intensification of this tendency in the next three to six months. 

The Coincident Global Barometer decreases by 4.0 points in October to 107.6 points. The Leading Global Barometer falls 11.6 points, to 96.5 points, the lowest level since July 2020 (82.1 points). All examined regions develop negatively in October, with greater declines in the Asia, Pacific and Africa region for the Coincident Barometer and the Leading Barometer.

The rate of recovery suffered a generalized drop across the regions, which may also due to restrictions on the availability of intermediate inputs in production chains and the limitations on energy supply. The pressures on the general level of prices caused by these restrictions have also created expectations regarding changes in economic policy, which, in turn, negatively impact the perspective for more consistent growth in economic activity in all sectors”, evaluates Paulo Picchetti, researcher of FGV IBRE.

Coincident Barometer – regions and sectors

All regions contribute negatively to the aggregate result in October, with the Asia, Pacific and Africa region standing out with a contribution of 2.1 points (53%) to the fall in the Coincident Global Barometer. The Western Hemisphere and Europe make negative contributions of 1.1 and 0.8 points, respectively. All regions continue to record indicators above the historical level of 100 points. The graph below illustrates the contribution of each region to the deviation of the Coincident Barometer from the historical average of 100 points.

Indicators for four of the five studied sectors decrease in October. The largest fall comes from the indicator for the Services sector, which, after its fourth consecutive decline, now records the lowest level among the sectors, after having recorded the highest level between May and September. In October, the highest level among the sectoral indicators is that of Industry, although the difference between the five sector indicators is small, with all of them recording levels between 104 and 109 points.

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 October. The Asia, Pacific and Africa region makes the strongest contribution to the fall, with 5.5 points, followed by Europe and the Western Hemisphere with negative contributions of 3.4 and 2.7 points, respectively. This is the first time that all regions record levels below the long-run average of 100 points since July 2020. 

There is a fall in all leading sectoral indicators in October, with the 28-point drop in the Services sector standing out; although this sector had been the most optimistic until the previous month, it closes October below the neutral level of 100 points, at 94.1 points. With this month’s decrease, the indicator that measures the general state of the Economy (aggregated development of economies) records 89.7 points, the lowest level since July 2020 (80.3 points). Only the Construction and Trade sectors continue to record levels that reflect short-term optimism.