Here's another indicator that suggests downside risks to the global economy are growing


After shooting the lights out last year, the global economy has stuttered its way through 2018 so far.

Many economic indicators have started to weaken, casting doubt as to whether the crescendo of the “synchronised economic upswing” is now over.

Here’s another indicator that suggests the global economy has lost some momentum this year.

ANZ Bank

It’s ANZ Bank’s Global Leading Index (GLI), something the bank says has a close association with global industrial production, leading the hard data by a couple of months.

Right now, while global activity levels remain above trend, and improving, the momentum seen in 2017 has now slowed across most major economies, both developed and developing.

At this point, ANZ is not concerned by the recent soft patch, but it will be watching developments in the months ahead closely.

“At this stage, the fall in the GLI can be seen as lessening the prospect of upside surprises in global growth, rather than necessarily implying the downside is more likely,” it says.

“But the loss of momentum does suggest the downside risks to global growth are rising.”

In April, the International Monetary Fund (IMF) said that after expanding 3.8% in 2017, global growth is expected to tick up to 3.9% in 2018 and 2019, supported by “strong momentum, favorable market sentiment, accommodative financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the United States”.

Based on recent indicators, including the GLI, there’s is now increased uncertainty about that optimistic forecast.

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