Global Economic Barometers signal continuing recovery

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Global Economic Barometers signal continuing recovery

The Coincident and Leading Global Economic Barometers rise in November, signaling continuity in the tendency of recovery in world economic activity, after having given slightly less positive signals in the previous month. The favorable overall development was mainly driven by the Asia, Pacific and Africa regions.  

The Coincident Global Barometer rises by 8.4 points in November, jumping from 86.2 points to 94.6 points. The Leading Global Barometer climbs by 5.7 points, reaching 114.0 points, the highest level since June 2010. All regions contribute positively to the result of the Coincident Barometer, with the strongest contribution coming from Asia, Pacific and Africa. The Leading Barometer rises in Asia, Pacific and Africa and the Western Hemisphere, while Europe contributes negatively to the aggregate indicator. The pandemic worsened again in October, particularly in Europe, and in some countries protection measures were tightened during the month. This development is likely to be only partially reflected in some of the survey results collected so far.

In November, the Coincident Global Barometer returned to showing a positive variation across the regions, although there remains significant diversion between the performances of the sectors. The fear of the return of restrictions on service sector activities, in particular, as a result of new waves of the pandemic, had a negative impact on the leading barometer in Europe. This result, combined with uncertainties on the continuity of incentive programs after the end of the year, place in question the possibility of acceleration in the rate of recovery of the Global Barometers,” evaluates Paulo Picchetti, researcher of FGV IBRE.

Coincident Barometer – regions and sectors
The Coincident Barometer for the Asia, Pacific and Africa region rises in November, contributing positively with 7.6 points, or 90%, to the result of the general indicator. The indicators for the regions of Europe and the Western Hemisphere (North America, Latin America and the Caribbean) also increase, both contribute more moderately with 0.5 and 0.4 points, respectively. The European Barometer has reached the level of the pre-pandemic period, as did the Western Hemisphere Barometer in the previous month. The Asia, Pacific and Africa region remains 0.9 points below this reference. The graph below illustrates the contribution of each region to the deviation of the Coincident Barometer from the historical average of 100 points. 

The strongest sectorial contribution to the increase in the Coincident Global Barometer in November comes from the Industry, followed by the set of variables reflecting the aggregated development of economies (Overall Economic Development). Variables from the Trade and Services sectors contribute modestly to the result while Construction makes a slightly negative contribution.

Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. In November, the Asia, Pacific and Africa region and the Western Hemisphere contribute positively to the aggregate result with 7.3 and 1.6 points, respectively. Europe records a decline of the Barometer, with a negative contribution of 3.2 points to the global indicator, presumably caused by the influence of a looming second wave of Covid-19 in the region. Despite this decrease, Europe still shows the highest level of the three regions.

In November, only the Industry sector contributes to the increase in the aggregate Leading Global Barometer (with 6.5 points). Trade and Construction contribute positively but with little significance to the result, while Services and the set of variables reflecting the aggregated development of economies (Overall Economic Development) contribute negatively to the Global indicator.