Leading Global Barometer signals slower recovery in coming months

In March 2024, the Leading Global Barometer records a setback, and the Coincident Barometer rises slightly after a fall in the previous month. The results reflect a sluggish development of global economic activity in the first quarter of 2024 and suggest that this will only improve slowly in the coming months.

The Coincident Global Economic Barometer increases 0.6 points, whereas the Leading Barometer decreases 5.8 points in March, reaching 92.8 points and 99.1 points, respectively. The modest rise in the Coincident Barometer was determined by the Western Hemisphere and Europe, while the significant drop in the Leading barometer is driven almost entirely by the Asia, Pacific & Africa region. Both indicators record levels below 100 points and thus below the medium-term average. However, the leading indicator continues to be higher than the coincident indicator.

“In contrast to last year's combination of a resilient global economy with a favorable trend of diminishing inflation rates, the economic landscape has undergone shifts in early 2024. The disinflationary trajectory, previously in motion, has encountered a relative standstill, largely attributed to the normalization of supply chains. Noteworthy is the sustained services inflation in the USA and Europe, fueled by historically low unemployment rates, thereby postponing the anticipated cycle phase of declining interest rates in these regions. Meanwhile, in Asia, China exhibits signs of ongoing recovery, while Japan confronts a deceleration. Despite the initial optimism prevalent across the region for the year, uncertainties persist, with a keen eye on the potential impact of measures introduced by Beijing in March to bolster the Chinese economy”, evaluates Aloisio Campelo Jr., researcher of FGV IBRE.

Coincident Barometer – regions and sectors

The slight increase in the Coincident Barometer in March is driven by contributions of the Western Hemisphere and Europe of 0.4 and 0.6 points, respectively, while the indicator value for the Asia, Pacific & Africa region remains constant. Since January 2024, the regional indicators for Europe and the Asia, Pacific & Africa region have remained relatively stable, indicating a slowdown in the rate of improvement seen in 2023. In contrast, the Western Hemisphere maintains an upward tendency and records the highest level among the regions. The regional coincident indicators continue to fluctuate in the 90-point band, signalling a continued modest recovery in global economic activity. The graph below illustrates the contribution of each region to the deviation of the Coincident Barometer from the historical mean of 100 points.

The development of the Coincident sector indicators in March is varied, with increases in Industry, Construction and Economy (aggregated business and consumer evaluations) and decreases in Trade and Services. With these results, Industry returns to having 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. In March, the largest negative contribution comes from the Asia, Pacific & Africa region, with -5.0 points. The Western Hemisphere and Europe contribute with -0.5 and -0.3 points, respectively, to the development of the final indicator. The indicator for the Asia, Pacific & Africa region reflects a tempering of the optimism of previous months, and the region’s indicator has now returned to a level below 100 points, which had not happened since July of 2023. Expectations for the global economic cycle, coming from Europe and the Western hemisphere, have also been dampened.

In March, all the Leading sector indicators decrease for the second consecutive month, with Economy (aggregated business and consumer evaluations) remaining as the only sector to register a level below 100 points.