The World Economy Is Looking Up – At Last!

By Shlomo  Maital   

World Temperature 

   A German research center known as IFO regularly surveys a panel of experts, to determine the state of the economy at present, and expectations for the near term future.  In January  2013  responses came from 1,169 experts in 124 countries.  (The survey is conducted in co-operation with the International Chamber of Commerce in Paris (ICC).)   I believe the survey is well done; I know it, as I am one of the panelists. 

   Here are the results. 

    I/2011 II/2011 III/2011 IV/2011 I/2012 II/2012 III/2012 IV/2012 I/2013

Climate 106.8  107.7   97.7    78.7  82.  95.0  85.1   82.4    94.1

Situation 102.8  108.4   99.1  86.0  84.1  87.9   78.5    76.6   80.4

Expectations 110.5  107.0  96.5  71.9  80.7  101.8    91.2  87.7  107.0

  “The ‘climate’ (combining the current situation and expectations for the next 6 months) improved significantly.  The increase in the indicator was mainly driven by significantly more positive assessments of the six-month economic outlook, while assessments of the current economic situation improved only slightly. After six months of stagnation, the prospects for the world economy seem to be brightening.  The sharpest rise was for Asia, but the expectation (outlook) for Western Europe also improved a lot, even though the current ‘situation’ is bleak.

    The rise in the 6-month expectation, nearly 14 points, resembles a similar rise in Q2 2012, optimism that quickly dissipated owing largely to the euro crisis.  It is now clear that the euro will be preserved and Greece will remain within it.

    We will have to wait and see whether the Ifo survey optimism about the world economy will be justified.  It just may well be that the global economy is about to see a slow but stable improvement, not only in Asia but also in Europe and North and South America.  This will be greatly welcomed.