Global Economic Barometers continue recovery trajectory
FGV’s Coincident and Leading Global Economic Barometers rose for the third time in a row in August, continuing the global economic recovery trend. While the Coincident Barometer is starting to gradually distance itself from the worst moment of the crisis, the Leading Barometer advanced more quickly in August, signaling optimism about the evolution of GDP in the coming months. This latter result should be interpreted with caution, however, due to the high level of uncertainty in terms of both the economy and health.
The Coincident Global Barometer increased 11.3 points in August, compared to the previous month, from 68.5 points to 79.8 points. The Leading Global Barometer rose 29.9 points, from 80.5 points to 110.5 points. The three surveyed regions all had a positive effect on the result. The Asia-Pacific and Africa region drove the improvement in the Coincident Barometer, while all three regions had similar contributions to the rise in the Leading Barometer.
“The combined effects of the stimulus measures and the reopening of activities around the world continue to guarantee the trajectory of recovery in global barometers in all the regions and sectors analyzed. Current indicators linked to the level of activity and asset prices suggest a faster pace of this resumption in relation to expectations during the pandemic’s worst moment, justifying the results of the leading barometer. However, the fulfillment of these expectations still heavily depends on the dynamics of the factors mentioned above: the potential for the continuity of stimuli and health dynamics following the relaxation of social distancing measures,” says Paulo Picchetti, a researcher at FGV IBRE.
Coincident Barometer – regions and sectors
The Asia-Pacific and Africa region accounted for more than 50% of the increase in the Coincident Barometer in August, contributing 6.4 points to the 11.3-point rise. The Western Hemisphere region (North America, Latin America and the Caribbean) rose less than in the previous month, contributing 2.1 points to the overall indicator. In turn, Europe contributed 2.8 points. The graph below shows each region’s contribution to the distance between the Coincident Barometer and its long-term average level of 100 points
All sectors continued to evolve positively in August. Once more, the biggest contribution to the improvement in the Global Coincident Barometer came from Industry, followed by the set of variables reflecting the evolution of economies at the aggregate level (General Economic Development). The Services, Commerce and Construction sectors continued to contribute modestly to the result.
Leading Barometer – regions and sectors
The Leading Global Barometer predicts global growth rate cycles between three and six months ahead. In August, the contributions of the Asia-Pacific and Africa region (13.5 points) and Europe region (11.9 points) to the 29.9-point increase in the global indicator were stronger than in the previous month. The Western Hemisphere contributed 4.6 points, down from 6.2 points in July.
All sector indicators had positive contributions to the results. Industry and the set of variables reflecting the evolution of economies at an aggregate level (General Economic Development) influenced 80% of the Leading Barometer’s result. The other sectors contributed less significantly to the increase in the general indicator.
The complete study is available here.
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