The Global Coincident and Background Barometers of the Economy fell in May compared to April, the second consecutive drop, reacting to the negative effects of the war in Ukraine, the outbreak of covid-19 in China and the persistence of high inflation in several countries, it said on Tuesday. fair (10) the Fundação Getúlio Vargas (FGV).
The Global Coincident Barometer dropped 5.5 points in May to 93.3 points, the lowest since October 2021 (90.7 points). The Global Background Barometer lost 1.9 points to 84.2 points, the lowest level since July 2020 (72.9 points).
In a note, FGV highlights that the conflict in Eastern Europe and the resurgence of the pandemic in China aggravate the shocks that spread high inflation around the world, prolonging a situation that, at the beginning of this year, seemed to enter a gradual trajectory of improvement.
“At the beginning of 2022, expectations regarding the evolution of prices of essential inputs were of deceleration, even with the resumption of economic activity. These expectations have been frustrated in recent months, in the context of new challenges in supply chains, undoing the perception of transitory inflationary shocks. Added to this context, the monetary policy reactions of the main economies in the world signal a deceleration in the level of activities, negatively impacting global barometers”, says an excerpt from the note released by FGV.
In the Global Coincident Barometer, which seeks to keep up with the pace of economic activity, the Asia, Pacific & Africa region contributed negatively with 2.9 points to the May drop, 53% of the aggregate decline.
The Western Hemisphere contributed only -0.8 points, while Europe took 1.8 points from the aggregate variation. The drop in the Global Coincident Barometer was also broadly based across sectors.
“The second consecutive drop in regional indicators confirms the increase in pessimism about global economic growth, in view of the worsening of the pandemic scenario in China, the continuity of the Russia-Ukraine conflict and high inflation in several countries of the world”, says the note from the FGV.
In the Global Background Barometer, which measures economic growth prospects over the next three to six months, the Asia, Pacific & Africa indicator contributed negatively with 3.2 points to the aggregate figure for May. The indicator for the Western Hemisphere took 1.9 points from the aggregate. On the other hand, the European indicator grew and contributed positively with 3.2 in the aggregate index.
“The result suggests that growth expectations for the coming months have been heavily revised in the first two regions, due to the Covid-19 outbreak in China and possibly the restrictive monetary policy in the United States, to contain the advance of inflation. The European regional indicator, in turn, recovers about half of the strong drop that occurred in the previous month due to the outbreak of the conflict between Russia and Ukraine”, 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.
Source: CNN Brasil
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