Carried out in partnership with ICC, the latest Ifo World Economic
Survey of more than 1,000 economists in 120 countries shows a slight
improvement in the current global economic situation and a significantly
brighter outlook for the six months ahead. The poll’s economic climate
indicator has risen to 98.6 for the fourth quarter of 2013, despite dropping to
94.1 in the third quarter.
“The survey’s more optimistic reports from economists worldwide are
encouraging,” said ICC Secretary General Jean-Guy Carrier. We now look to WTO
negotiators, meeting in Bali next month, to conclude a trade facilitation deal
could create more than US$1 trillion in world export gains and approximately 21
million jobs, contributing significantly to global economic prospects.”
Following a shaky third quarter, confidence in Asia’s economy show a
marked recovery, mainly driven by positive expectations in Japan and China.
With the region’s current economic situation back to “satisfactory”, and
expectations buoyant for future economic developments, the Ifo economic climate
indicator for Asia has risen above its 15 year average.
Gernot Nerb of the Ifo Institute said: “Given the weight of Asia in the
world economy, I’d consider this renewed confidence as highly influential for
the recovery of the world economy.”
North America dips
Recent improvements in North America’s economic climate stalled slightly
as World Economic Survey experts became more critical of the economic situation
during the US government’s partial shutdown last month. However, the dip in
confidence was small and six-month expectations remain positive.
Eurozone lagging but hopes
Confidence in the eurozone has grown markedly, even though economic
recovery is lagging behind other world regions. The divide is widening between
northern and southern euro economies and although the economic situation has
improved overall it remains unfavourable. High unemployment, public budget
deficits and weak demand continue to plague several countries.
However, six-month expectations are at their highest for almost three
years. Experts are also more confident about economic perspectives for the next
3-5 years. Only one country – Cyprus – expects continued decline. Particularly
high optimism in Germany has helped the eurozone’s economic climate indicator
rise above its long-term average for the first time since 2011.
Mr Nerb said: “There are growing signs that Europe is coming out of the
doldrums and is finally showing signs of recovery. The expansionary monetary
policy of the ECB is certainly one of the reasons for that.”
The ICC-Ifo survey shows Greece, Italy, Portugal, Spain and Cyprus
remain in crisis. Germany and Estonia are still the only economies to be scored
as “satisfactory to good”.
Inflation outlook unchanged
Globally, WES analysts expect a 3.2% increase in prices for 2013,
unchanged from the previous two quarters. Estimates for the euro area remain at
1.7% for 2013. Short-term interest rates, set by central banks, are expected to
remain largely stable on average over the next six months. However, a growing
number of analysts expect a rise in long-term interest rates, which are affected
mainly by the capital market. Despite a slight increase forecast in long-term
interest rates over most of the eurozone, decreased or unchanged rates are
expected in crisis-afflicted countries.
WES economists expect the value of the US dollar to grow moderately over
the next six months, and the US dollar to appreciate against the euro. Most believe the euro is overvalued against
the US dollar and the Japanese yen.
Spotlight on trade
In the run-up to the World Trade Organization’s meeting of ministers in
Bali next month, two special ICC questions in the survey focused on trade
WES economists were asked if governments should conclude an agreement on
trade facilitation to simplify customs procedures. In every world region, at
least 94% answered that they “agree” or “strongly agree". Consent is
particularly pronounced in North America, where 100% of respondents would like
to see customs processes simplified. Support is lower in countries specializing
in goods such as agricultural products, steel and lumber, where trade
facilitation is perceived to bring less substantial gains.
Most respondents also believed governments should agree to employ
alternative, pragmatic negotiating approaches to liberalize world trade within
a multilateral framework. Support was highest in North America where 94% of
respondents agreed with this approach, most of them “strongly”. Consent appears
slightly lower in the Near East, Africa, Eastern Europe and the CIS countries.