The world economy has weakened slightly this quarter, mainly due to declining optimism in Asia and Latin America, while North America shows signs of continuing recovery, according to a recent world economic survey published by the International Chamber of Commerce (ICC) and the Munich-based economic research institute Ifo.
The latest “Ifo World Economic Survey” of more than 1,000 economists in 123 countries shows some decline in both the current global economic situation and the six-month economic outlook.
The poll’s climate indicator dropped to 94.1 for the third quarter of 2013, back down to early 2013 levels, despite a rise to 96.8 in the second quarter.
“We’re encouraged by the climate of economic recovery in the US, and some stabilization in Europe,” said ICC Secretary General Jean-Guy Carrier. “However, with many economies still struggling, governments need to do more to restore investor confidence.”
In Asia, the Ifo economic climate indicator fell to below its long-term average following a temporary boost in optimism in the previous quarter.
This was driven mainly by increased caution about China’s six-month economic outlook, while the current economic situation slipped below “satisfactory.”
“The decline in China’s economic climate is largely due to a drop in expectations—it’s a psychological issue. We need to wait to the next quarter to see if these less optimistic sentiments materialize as real economic decline,” Klaus Wohlrabe, deputy head of Ifo’s Center for Business Cycle Analysis and Surveys, explained.
As for signs of global economic recovery, Wohlrabe said that developments in the next three months are crucial.
“The poll suggests some global recovery could still be possible this year: it’s stopped, but we’re still on an even path,” Wohlrabe said. “We hope the business climate will pick up in the next quarter, but if it declines, particularly in Asia, the world economy could deteriorate.”
Experts have become more upbeat about North America’s economic situation over the past year, and expectations continue to rise, suggesting economic recovery will continue, the ICC said in a written statement.
The ICC-Ifo poll suggests emerging economic stabilization in the Euro zone. Economic expectations have reached a three-year high, boosting the area’s economic climate indicator to its highest level since late 2011. However, while assessments of current economic conditions in Euro countries are back up to early 2013 levels, the overall economic climate is still below its long-term average.
Ifo attributes this optimism in the Euro zone to “a lack of bad news” since confidence was boosted last year by European Central Bank President Mario Draghi’s pledge to protect the Euro zone from collapse. This is giving countries the time they need to put into effect measures for economic recovery.
ICC-Ifo survey respondents describe the economic situation as “poor” in France, Greece, Italy, Portugal, Spain, and Cyprus. They are slightly more positive about Belgium, Ireland, Finland, The Netherlands and Slovenia. Germany and Estonia are the only economies to be scored as “satisfactory to good.”
Photo: stevenharris
