Global Barometers from FGV fall in August compared to July

The Global Coincident and Antecedent Barometers of the Economy dropped in August compared to July, informed this Wednesday (10) the Fundação Getulio Vargas (FGV).

The Global Coincident Barometer dropped 3.5 points in August, to 88.9 points, in the seventh straight month of decline – in the period, the accumulated decline was 22.3 points.

The Global Background Barometer dropped 3.4 points to 82.5 points, the lowest level since June 2020, when it stood at 60.7 points.

According to FGV, “the results reflect a pessimistic outlook for global economic growth also in the coming months”.

Lower levels than those currently recorded in global barometers were only reached in the two global recessions of the 21st century, between 2008 and 2009, because of the financial crisis that started in the United States, and in 2020, because of the Covid-19 pandemic.

In the Global Coincident Barometer, which seeks to keep up with the pace of economic activity, all regions surveyed contributed to the decline.

The biggest negative force came from the Asia Pacific & Africa region with -2.5 points.

Europe contributed -0.9 point. The Western Hemisphere region contributed -0.1 point.

“The drop in the global indicator is partly caused by supply restrictions related to the war in Eastern Europe and the economic slowdown in Asia, a continent that had shown signs of recovery in the previous two months, after the easing of mobility restrictions adopted in China as measure to help combat an outbreak of Covid-19. The new fall in the region’s coincident indicators suggests that the apparent recovery may have been a temporary effect”, says the report released by FGV.

Disaggregated by sectors, the Global Coincident Barometer also had a general low in August.

“The negative highlight of the month is the Construction sector, with a drop of 4.0 points and the lowest level among all sectors (71.5 points). As a result, all indicators are even further away from the historical average of 100 points, with the Construction sector being the furthest away (28.5 points) and the Industry sector, the least distant (9.5 points)”, says the FGV report.

In the Global Background Barometer, which measures prospects for economic growth over the next three to six months, the August drop was also widespread among surveyed regions.

The Asia, Pacific & Africa region contributed the most to the decline, with -1.9 points. Europe also responded negatively, for the third consecutive month, with -1.4 points.

The leading indicator for the Western Hemisphere was stable in August, after three months of declines.

“Expectations for global growth in 2022 have been worsening as a result of, among other factors, 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 keeping the global indicator in an unfavorable region”, says the FGV report.

Disaggregated by sectors, four of the five leading sectorial indicators fell in August. Only the Trade indicator rose, after three consecutive declines.

All indicators are below and far from the historical average of 100 points, with a negative highlight for Construction, which is 24.4 points below the neutral level, informed the FGV.

At the opposite extreme, Trade is the least distant sector (13.6 points).

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.