FGV: Global barometers indicate that the world economy is in sharp deceleration – 07/08/2022

The Global Coincident and Background Barometers of the Economy continue to signal a strong slowdown in world growth in 2022, according to information released this Friday morning by the Fundação Getulio Vargas (FGV). The Global Coincident Barometer fell for the sixth straight month, dropping 2.5 points in July to 91.5 points. The Global Antecedent Barometer, in turn, did not change and stood at 86.2 points. Thus, it stabilizes 10 points below the historical average of 100 points.

“The performance of global barometers in July reflects the challenges to maintain the level of activity across almost all regions and sectors in the coming months. As monetary authorities around the world act to contain widespread price increases, on the supply side the restrictions still imposed by the supply chain problems make the necessary effort of the demand containment measures greater”, evaluated Paulo Picchetti, researcher at FGV IBRE, according to a note released by the foundation.

In the Global Coincident Barometer, which seeks to keep up with the pace of economic activity, the Western Hemisphere and Europe regions have a negative index of 1.5 and 1.1 points, respectively. On the other hand, the Asia, Pacific & Africa region contributes positively with 0.1 point.

“The drop in the global indicator is caused, at least in part, by additional supply restrictions related to the war in Eastern Europe. , may have positively influenced the result of the Asia, Pacific & Africa region for the second consecutive month, although the region is still responsible for more than half of the 39.2-point drop in the global indicator in the last 12 months.

The Global Background Barometer, which measures prospects for economic growth over the next three to six months, has held steady for similar reasons. “As with the Coincident Barometer, the Western Hemisphere and Europe contribute negatively by 1.0 and 0.7 points, respectively, to the Ahead Barometer result, while the Asia, Pacific & Africa region moves in the opposite direction. , partially offsetting the more expressive drops in previous months and contributing 1.7 points to the evolution of the Antecedent Barometer in the month”, considers the foundation.

According to FGV, the results point to a worsening in global growth expectations in 2022. “(They) have been getting worse as a result of the continuation of the war between Ukraine and Russia and the adoption of more restrictive monetary policies in several countries. Such factors have contributed to keep the global indicator in an unfavorable region”, says the FGV note.

Calculated in partnership with the Swiss Economic Institute KOF of ETH Zurich, and published in Brazil by the Brazilian Institute of Economics (Ibre) of FGV, the two indicators are formed from the results of research on economic trends carried out in more than 50 countries. The goal is to achieve the widest possible global coverage. The Coincident Barometer includes about a thousand different time series, while the Leading Barometer comprises around 600 time series.

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