Global Barometers weakened in June

The Coincident and the Leading Global Economic Barometers fall by 1.4 and 3.3 points to 83.9 and 91.7 points respectively in June 2023. This is due to a deterioration in both the assessment of the current situation and the expectations in the Asia, Pacific & Africa region and in Europe. After the indicators did stabilise over the previous two months, they are now moving away from the historical average of 100 points.

“The decline in both barometers in June reflects the fragility of the normalisation tendencies observed earlier in the year. After the relief of having survived the winter in terms of the energy crisis and the hope that the opening up of the Chinese economy would provide a strong boost to the global economy, the impact of ongoing geopolitical tensions, higher price levels and the rise in key interest rates in many parts of the world is increasingly weighing on business and consumer sentiment and assessments. The below-potential global economic growth already observed over the winter is likely to continue as the year progresses”, evaluates Jan-Egbert Sturm, Director at KOF Swiss Economic Institute.

Coincident Barometer – regions and sectors

In June, the Asia, Pacific & Africa region and Europe contribute negatively with -1.1 and -0.5 points, respectively, to the decline in the Coincident indicator, while the Western Hemisphere contributes positively with 0.2 points. The three indicators appear to continue to face headwinds, reflecting the ongoing weakness of the world economy, influenced by the impact of monetary tightening and uncertainty about the Chinese economic growth. The graph below shows the contribution of each region to the deviation of the Coincident Barometer from its historical average of 100 points.

All Coincident sector indicators fall this month, except for Construction, which, nevertheless, remains the lowest among the sectors.  

Leading Barometer – regions and sectors 

The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. As in the case of the Coincident Barometer, the Asia, Pacific & Africa region and Europe contribute negatively with -3.2 points and -1.3 points respectively, while the Western Hemisphere contributes in the opposite direction with 1.2 points. With two notable declines in a row, the Leading indicator for Europe is again the lowest among the regions. Overall, the level of the indicators points to sceptical expectations for economic activity in Europe and the Western Hemisphere, motivated by the inflationary environment and high interest rates, but moderated by economic growth in the Asia, Pacific & Africa region.

The Leading indicator sectors follow the same tendency as the Coincident sectors, with decreases in all sectors except Construction, which records an increase of 10.2 points for the month. The Economy (aggregated business and consumer evaluations) remains the highest among the sectors, while Services is the lowest, being the only indicator below 90 points.