The race between the pandemic and immunization programmes

The race between the pandemic and immunization programmes

The February Global Economic Barometer results reflect the uncertainty of the rate of recovery of global economic activity in the first half of 2021 and the noticeable heterogeneity between the regions. The Coincident Barometer increases with less intensity than in the previous month, while the Leading Barometer is moving towards the approximately neutral level. 

The Coincident Global Barometer increases by 1.3 points in February, from 96.3 to 97.6 points. The Leading Global Barometer falls 6.9 points, to 104.1 points. On the Coincident time frame, only the Asia, Pacific and Africa region developed favourably, while Europe and the Western Hemisphere contribute negatively to the result. For the Leading Barometer, the Western Hemisphere moves in the opposite direction to the other regions with a slight positive contribution to the aggregated result.

“Despite the positive result from the Asia, Pacific and Africa region, in the other regions, the advance of the pandemic resulted in stricter social isolation conditions and, consequently, a slower pace in their contributions to the Coincident Barometer. In terms of the sectors, the short-term positive variations result from the low base of comparison, while Industry, which had been recovering at greater intensity, returned to recording a net negative variation. All the sectors and regions, with the exception of the Western Hemisphere, contribute negatively to the Leading Barometer, demonstrating the challenges to meeting planned immunization targets in the coming months”, evaluates Paulo Picchetti, researcher of FGV IBRE.

Coincident Barometer – regions and sectors

The Asia, Pacific, and Africa region contributes 2.1 points to the rise in the Coincident Barometer in February, while the Western Hemisphere and Europe contribute with -0.5 and -0.3 points negatively, respectively. The difficulties encountered in the immunization campaigns occurring alongside the arrival of even more infectious variants of COVID-19 may have influenced the poor result of the latter two regions. The graph in the press release illustrates the contribution of each region to the deviation of the Coincident Barometer from the historical average of 100 points. 

Among the five sectors, Retail and Wholesale Trade, Services, and the set of variables reflecting the aggregated development of economies (Overall Economic Development) contribute positively to the result, whereas the remaining sectors move in the opposite direction. The strongest positive contribution comes from Retail and Wholesale Trade and the strongest negative contribution from Industry.

Leading Barometer – regions and sectors

The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. In February, the Asia, Pacific, and Africa region is responsible for 70% of the decrease in the aggregate indicator, whilst Europe contributes negatively 2.2 points, or 32%. The results reflect the uncertainties as to each country’s rate of recovery in the face of the challenge of global immunization and control of the pandemic. The Western Hemisphere contributes in the opposite direction to the other regions, but now with a slightly positive result for this month. 

All Sectorial Leading Barometer decreased in February. The set of variables reflecting the aggregated development of economies (Overall Economic Development) and Industry remain the most optimistic groups (with 111.1 and 110.0 points, respectively), despite the latter having recorded the largest fall among the sectors this month. The second largest drop among the sectorial Barometers came from the Services sector, which remains yet to recover from its pandemic losses.

In February, all the Leading sectorial Barometers contribute negatively to the aggregate result. Industry contributes with 4.6 points to the decrease in the general indicator. The other sectors contribute between 0.2 and 0.8 points each to the aggregate result.