Global Barometers indicate slower growth in second half of 2021
In September, the Global Economic Barometers maintained the weakening trend begun in July, reflecting the slowdown in world economic growth in the second half of 2021. Despite this deceleration, the indicators remain high and compatible with the continuation of the current phase of global economic recovery.
The Coincident Global Economic Barometer dropped 6.3 points in September, to 111.8 points, while the Leading Global Economic Barometer declined 7.2 points, to 105.1 points. All surveyed regions fell in the month, with the sharpest drops in the Asia, Pacific & Africa region for the Coincident indicator and in Europe for the Leading indicator.
“The activity level has been recovering from the pandemic’s worst period due to advances in vaccination and the relaxation of mobility restrictions. However, this recovery has been taking place amid the persistence of problems related to the supply chains of various raw materials, transforming part of the increase in demand into higher prices across all regions and sectors. The decelerations observed in the coincident and leading barometers reflect issues related to these supply constraints and economic policy alternatives to deal with generalized price increases,” says FGV IBRE researcher Paulo Picchetti.
Coincident Barometer – regional and sector indicators
The Asia, Pacific & Africa region contributed the largest share (3.9 points) to the drop in the Coincident Global Barometer, followed by Europe and the Western Hemisphere, with negative contributions of 1.3 and 1.1 points, respectively. All regions are still above the long-term average of 100 points. The graph in the press release shows the contribution of each region to the Coincident Barometer in relation to 100 points.
All five sectors monitored by the survey contributed negatively to the Coincident Barometer’s aggregate result in September. The indicator that measures the evolution of economies at aggregate level (Economy) contributed the most to the month’s decline, followed by Industry and Commerce. The other sectors contributed modestly to the result. The Service Sector indicator dropped for the third consecutive time, now at a slower pace, but it is still the highest out of all sectors.
Leading Barometer – regional and sector indicators
The Leading Global Barometer predicts world growth rate cycles three to six months in advance. The leading indicators for the three regions contributed negatively to the Leading Barometer’s result in September. The Europe region contributed 3.6 points to the fall, followed by Asia, Pacific & Africa with 2.3 points and the Western Hemisphere with 1.2 points. Europe, which last month was the most optimistic region, became the first region to converge toward neutrality, recording 99.9 points. The other regions remained above 100 points.
There was a drop in leading sector indicators in September. The biggest contributions to the aggregate result came from Industry and the indicator that measures the evolution of economies at aggregate level (Economy). The other sectors contributed modestly to the final result. Due to the month’s falls, the Economy indicator slipped below 100 points for the first time since July 2020, but the Construction, Services and Commerce sectors remained at levels that reflect optimism in the short term.
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