Global Barometers confirm the values of the previous month, which had developed positively
The Global Barometers remain relatively stable in December, after the noticeably increases recorded in the previous month. The Coincident Barometer slips slightly in relation to November, but ends the quarter at a more favourable level than the previous quarter, signalling overall an acceleration in global economic growth. The Leading Barometer, in turn, increases this month and suggests an increase in confidence among companies and consumers in relation to the end of the previous quarter.
The Coincident Global Economic Barometer decreases 0.2 points in December, to 96.5 points, after gaining 2.9 points in the last month. The Leading Barometer increases 0.5 points this month, reaching 105.1 points, after a gain of 2.3 points in November. These movements reflect declines in the indicators for the Asia, Pacific & Africa region which are dampened or overcompensated by increases in the indicators for Europe and the Western Hemisphere.
“Last month's upturn in global barometers has continued, suggesting that global economic conditions are only slightly below average and that expectations for the next two quarters remain positive. The extent to which this reflects the outcome of the US election is difficult to assess. However, the fact that the improvements over the past two months are mainly related to the overall assessment of the economic situation, with the Western Hemisphere returning to above-average levels and the Asia-Pacific and Africa regions showing a deterioration in both the current assessment and the outlook, can be interpreted as such”, says KOF Director Jan-Egbert Sturm.
“Last month's upturn has continued, suggesting that global economic conditions are only slightly below average and that expectations for the next two quarters remain positive”Jan-Egbert Sturm, Director of KOF Swiss Economic Institute
Coincident Barometer – regions and sectors
The slight decrease of 0.2 points in the Coincident Barometer in December is the result of the 1.0-point negative contribution of the coincident indicator for the Asia, Pacific & Africa region and increases of 0.6 and 0.2 points from the Western Hemisphere and Europe respectively. After relative stability over the year, the indicator for the Western Hemisphere records two consecutive increases in November and December to end 2024 with the highest level among the regions.
Among the Coincident sector indicators, the standouts are the recovery of the Economy (aggregated business and consumer evaluations) segment with a third consecutive increase in December, and the slowdown in the Construction sector in the past two months. The indicators for Industry and Trade decrease while Services makes gains.
Leading Barometer – regions and sectors
The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average. In December, in line with the Coincident indicator, the Asia, Pacific & Africa region contributes negatively to the aggregate result with -0.9 points, while Europe and the Western Hemisphere contribute positively with 0.8 and 0.6 points, respectively. The Leading Global Barometer has remained above but close to the neutral level of 100 points throughout 2024. With the sequence of three increases in the last three months of the year, the indicator suggests an acceleration in the global economy for the beginning of 2025.
Among the Leading sector indicators, Trade, Services, and Economy increase, with the latter closing in on the other sectors, while Construction and Industry 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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