Global Barometers rise in November, led by the Asia, Pacific and Africa region
After remaining practically stable for most of the year, the Global Barometers increase more markedly in November. The region Asia, Pacific & Africa stands out in the development of the Coincident barometer, which records its highest level since April 2022.
The Coincident Global Economic Barometer gains 2.6 points in November, to reach 96.5 points, the highest level since April 2022 (99.9 points). The Leading Barometer, in turn, increases 2.4 points this month, to 104.7 points. As in October, the rise in both indicators is mainly determined by the results of the Asia, Pacific & Africa region. The data included in both the Coincident Global Economic Barometer and the Leading Global Economic Barometer is from before the US election.
“The coincident indicator is taking a clear step towards its long-term average, something we have been waiting for for almost a year. On the one hand, the leading indicator remains much more favourable than the coincident indicator. That raises hopes that we may indeed see further steps towards a normalisation of the global economy. On the other hand, now that Asia has caught up with sentiment in other parts of the world and all regions are more or less in sync, it may become more difficult to take the next steps towards normalisation” comments KOF Director Jan-Egbert Sturm the latest results of the Global Economic Barometers.
“We have been waiting for this clear step of the coincident indicator towards its long-term average for almost a year. We might indeed see further steps towards a normalisation of the global economy in the near future but there are also signs that this might become more difficult”Jan-Egbert Sturm, Director of KOF Swiss Economic Institute
Coincident Barometer – regions and sectors
The increase in the Coincident Barometer in November is the result of the 2.0-point positive contribution of the coincident indicator for the Asia, Pacific & Africa region, while the Western Hemisphere contributes less significantly, with 0.7 points. The indicators for Europe remain overall relatively stable, with a slight decrease of 0.1 points. After fluctuating throughout the year, the indicator for the Asia, Pacific & Africa region returns to the level observed in January (95.4 points) with a cumulative gain of 6.8 points in the past two months.
Among the Coincident sector indicators, the gain in the Economy (aggregated business and consumer evaluations) segment stands out in November, which is closing in on the other sectors after losing ground in previous months. The indicators for Industry and, to a lesser extent, Trade also increase in November, while Construction and Services decrease.
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. In November, the indicators for the Asia, Pacific & Africa region and the Western Hemisphere contribute positively to the aggregate result with 2.1 and 0.3 points, respectively, while Europe remains stable.
Among the Leading sector indicators, Services, Industry and Economy increase in November, with the 6.1-point gain in Services standing out. In contrast, the indicators for Construction and Trade decrease this month.
The Global Economic Barometers
The Global Economic Barometers are a system of indicators enabling timely analysis of global economic development. They represent a collaboration between the KOF Swiss Economic Institute of the ETH Zurich in Switzerland and Fundação Getulio Vargas (FGV), based in Rio de Janeiro, Brazil. The system consists of two composite indicators, the Coincident Barometer and the Leading Barometer. The Coincident Barometer reflects the current state of economic activity, while the Leading Barometer provides a cyclical signal roughly six months ahead of current economic developments.
The two Barometers comprise the results of economic tendency surveys conducted in more than 50 countries with the aim of achieving the broadest possible global coverage. The advantages of economic tendency surveys are that their results are usually readily available and are not substantially revised after first publication.
The Coincident Barometer includes more than 1,000 different time series, while the Leading Barometer consists of over 600 time series. Cross-correlation analysis is used to decide which individual time series are included in the barometers. This involves correlating the individual time series with a reference series. The reference series used is the year-on-year growth rate of global gross domestic product (GDP), where the individual national GDPs are aggregated at purchasing power parity to form global GDP. A time series is only included in a Barometer if it shows a sufficiently high correlation and a suitable synchronization or lead with the reference series. The time period used for this correlation analysis currently runs from January 2010 to December 2019.
The series of the two Barometers are revised each month at publication and are standardized to have a mean of 100 and a standard deviation of 10 for the 10-year period previous to the most recent observations.
The methodology is described in:
Klaus Abberger, Michael Graff, Aloisio Jr. Campelo, Anna Carolina Lemos Gouveia, Oliver Müller and Jan-Egbert Sturm (2020), The Global Economic Barometers: Composite indicators for the world economy. KOF Working Papers, vol. 471, Zurich: KOF Swiss Economic Institute, ETH Zurich, 2020.
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