Global Economy – Global Barometers move in opposite directions in August – KOF

After two months of joint advancement, the Global Economic Barometers move in opposite directions in August: the Coincident Barometer declines, while the Leading Barometer maintains the upward tendency of previous months. Both remain above the 100-point mark, indicating the continuation of moderate growth for the world economy.

In the August edition, the Global Coincident Economic Barometer decreases by 0.4 points to 103.2 points, after four months of increases. In opposite direction, the Global Leading Economic Barometer rises by 2.7 points to 104.4 points, the highest level since February 2022 (106.3 pts.). The Asia, Pacific & Africa region and Western Hemisphere contribute negatively to the Coincident Barometer, while the rise in the Leading Barometer is driven mainly by the positive contribution from Asia, Pacific & Africa.

"The world economy continues to recover, with Europe also showing genuine signs of actual improvement. Despite the ongoing uncertainty surrounding the Strait of Hormuz and the adverse weather conditions affecting at least Europe, the sustained improvement in the leading indicator suggests that this may not just be a short-lived phenomenon. Unfortunately, sudden geopolitical events have surprised us before", comments Jan-Egbert Sturm, Director of KOF Swiss Economic Institute.

Coincident Barometer – regions and sectors

The 0.4-point decrease in the Coincident Barometer in August results from a negative contribution of 0.5 points from both Asia, Pacific & Africa and the Western Hemisphere, while Europe contributes positively with 0.6 points. As a result, the Western Hemisphere records the highest level among the regions, despite the decrease; and Europe reaches 100.8 points, the highest level since July 2022 (100.9 points). Thus, the indicators across the different regions remain above 100 points.

Among the coincident sectoral indicators, Wholesale and retail trade, Services, and Construction rise this month, while Economy (aggregation of business and consumer indicators) and Industry fall. As a result, Industry maintains the highest level among the sectors, and Wholesale and retail trade reaches the 100-point mark.

Leading Barometer – regions and sectors

The Global Leading Barometer rises by 2.7 points in August, with the Asia, Pacific & Africa region contributing positively with 2.9 points and Europe with 0.2 points, while the Western Hemisphere contributes in the opposite direction, with -0.4 points. Nevertheless, the Western Hemisphere maintains the highest level among the regions, while Asia, Pacific & Africa and Europe reach their highest levels since February and May 2022, respectively. The Leading Global Barometer leads the world economic growth rate cycle by three to six months on average.

Among the leading sectoral indicators, only Construction declines this month. The Economy indicator reaches the highest level since February 2022 (106.2 points), and Industry reaches the highest level since March 2022 (105.8 points).