The Coincident and Leading Global Economic Barometers increase by 2.0 and 2.1 points, respectively, to 85.8 and 93.2 points in July 2023. The favorable result occurred in both time horizons of the three regions analysed. Both indicators have fluctuated in a relatively narrow range since March of this year, with the Coincident Barometer fluctuating between 84 and 86 points and the Leading Barometer between 91 and 95 points.
“The positive fluctuations of the Coincident Global Barometers in the three regions in July were not enough to revert the results accumulated over the last 12 months in two of the regions, the exception being the Western Hemisphere. In the Asia, Pacific & Africa region and Europe, on the one hand, restrictive monetary policy measures are beginning to have a cooling effect on the generalized price increases. On the other hand, the results of the Coincident Barometers reproduce the difficulties in maintaining the growth rate of the main indicators of the level of activities throughout most of the sectors. In turn, this more positive dynamic regarding the inflation issue positively affects expectations, which is reflected in the rise of the Leading Global Barometers across the regions”, evaluates Paulo Picchetti, researcher of FGV IBRE.
Coincident Barometer – regions and sectors
In July, the Western Hemisphere made the largest positive contribution among the regions with 1.4 points, followed by the Asia, Pacific & Africa region with 0.5 points and Europe with 0.1 points. Despite this month’s increase, the level of the indicators continues to reflect a modest pace of world economic activity. This is influenced by the tightening of monetary policies in various countries to counter the recent surge in inflation and is also by the fact that the Chinese economy has so far not shown a strong rebound in growth rates and therefore has not provided a corresponding international stimulus. The graph below illustrates the contribution of each region to the deviation of the Coincident Barometer from its historical average of 100 points.
All the Coincident sector indicators increase this month, with the Construction sector recording its fourth consecutive increase and its highest level since April 2022. Despite the month’s positive results, there is also a perception of weak activity prevalent among the sectors, which remain at levels below the historical average of 100 points.
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by an average of three to six months. In July 2023, as in the case of the Coincident Barometer, all the regions contribute positively. The Asia, Pacific & Africa region contributes 1.0 points, followed by the Western Hemisphere and Europe with 0.8 points and 0.3 points, respectively. In general, the level of the indicators points to more pessimistic expectations for economic activity in Europe and moderate expectations for economic growth in the Asia, Pacific & Africa region and the Western Hemisphere.
The Leading indicator sectors increase in July, with the exception of the indicator for the Economy (aggregated business and consumer evaluations), which falls for the second consecutive month. With this result, the indicator for Trade reaches the neutral zone and that of Construction approaches the 100 points mark.