DOHA/PARIS: 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 the findings of a World Economic Survey (WES) released yesterday by the International Chamber of Commerce (ICC) and the Munich-based economic research institute Ifo.
Carried out in partnership with ICC, the latest 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 Q3 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 stabilisation in Europe,” said ICC Secretary General Jean-Guy Carrier.
“However, with many economies still struggling, governments need to do more to restore investor confidence. ICC urges G20 leaders to take strong measures to address this uncertainty at the upcoming G20 Summit in Saint Petersburg,” Carrier said.
ICC has also been urging members of the WTO to reach a final agreement on trade facilitation, which could result in GDP increases of about $960bn and create over 18 million jobs worldwide, according to a study by the Peterson Institute.
“There are very few issues that need to be resolved to reach an agreement on trade facilitation and this could be achieved by December 2013 at the next ministerial conference,” said Carrier.
As for signs of global economic recovery, Klaus Wohlrabe, Deputy Head of Ifo’s Center for Business Cycle Analysis and Surveys, explained 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.”
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,” Wohlrabe explained.
The WES 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 poll suggests emerging economic stabilisation in the Eurozone.
Economic expectations have reached a three-year high, boosting the area’s economic climate indicator to its highest level since late 2011. Only Slovenia and Cyprus expect continued economic decline.
Ifo attributes this optimism in the Eurozone to “a lack of bad news” since confidence was boosted last year by the European Central Bank President Mario Draghi’s pledge to protect the Eurozone 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”.
The analysts expect a 3.2 percent increase in prices for 2013, unchanged from the previous quarter. Estimates for the euro area fell to 1.7 percent for 2013, down from 1.9 percent in the previous quarter. Short-term interest rates, set by central banks, are expected to remain largely stable on average over the next six months.
The WES participants expect the value of the US dollar to grow moderately over the next six months, and the US dollar to appreciate against the euro.
The Peninsula
