Global Barometers decline in April
The Coincident Barometer decreases for the second consecutive month and returns to the level of September 2024. The fall in the Leading Barometer keeps the indicator generally slightly above 100 points, a tendency that has been observed since May 2024. However, the recent escalation in the trade tensions is not reflected in the data.
In April, the Coincident and the Leading Global Barometers decrease 1.5 points and 1.7 points to 92.3 and 101.9 points, respectively. In both cases, the fall is mainly driven by the Western Hemisphere indicators. Europe is a distant second. In contrast, the contribution of the Asia, Pacific & Africa region to the variation in the global indicators is almost null this month.
“Although the unexpectedly strong announcements by President Trump on what he called ‘US Liberation Day’ and the shockwaves that followed are not yet reflected in the Global Barometers – they reflect survey data collected in March – the downward momentum of both is clearly driven by lower assessments and sentiment in the US-dominated Western hemisphere. This does not bode well for the future direction of these two leading indicators of the global economy”, comments KOF Director Jan-Egbert Sturm the latest results.
“Although Trump's 'US Liberation Day' comments haven't yet been reflected in the March data, Global Barometers are falling - largely due to weaker sentiment in the US-led Western Hemisphere – raising concerns about future economic trends.”Jan-Egbert Sturm, Director of KOF Swiss Economic Institute
Coincident Barometer – regions and sectors
The 1.5-point decrease in the Coincident Barometer in April results from negative contributions of -1.1 points from the Western Hemisphere, -0.3 points from Europe, and -0.1 points from the Asia, Pacific & Africa region. The Western Hemisphere reaches 91.4 points, its lowest level since December 2023, and is closing in on the indicator for the Asia, Pacific & Africa region, which continues to record the lowest level among the regional coincident indicators (90.9 points).
Among the Coincident sector indicators, only Construction records an increase, while, Trade, Services, the indicator for Economy (aggregated business and consumer evaluations) and Industry decrease this month.
Leading Barometer – regions and sectors
In April, the Western Hemisphere contributes negatively with -1.6 points to the 1.7-point fall in the Leading Global Barometer. Europe contributes -0.2 points while the Asia, Pacific & Africa region makes a positive contribution of 0.1 points. With this result, only the Western Hemisphere is below 100 points, recording the lowest level among the regions, which has not happened since December 2023. The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average.
Among the Leading sector indicators, only Economy (aggregated business and consumer evaluations) makes a slight increase in April. The marked decline in the Trade sector stands out, taking the indicator to below the 100-point level for the first time since May of last year.
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), in which 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 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 coefficients of the component series of the Global Barometers have remained stable since the April 2020 edition.
The Global Barometers 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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