World Economic outlook improves significantly

According to the CES-Ifo Index, the world economic outlook has improved considerably, from 102.3 to 105 points on the previous quarter. The Ifo current economic situation and economic outlook are both looking much better now.

CES-Ifo is an independent institute within the Economics Faculty at the University of Munich, Germany.

The Ifo World Economic Climate report says that global economic activity is increasing. However, the risks have also increased.

Nearly three quarters of the WES (World Economic Survey) experts surveyed believe that increasing energy prices and shortages in supply pose a moderate-to-high potential threat to the global economy.

US & Asia up, Europe, Near East & L. America down

The improved global economic climate is mainly driven by an increase in the Ifo index in the USA to 5.9, as well as Asia which has a plus of nearly 10 points.

Europe’s index, on the other hand, fell -0.9, while the Near East declined by -5.7 and Latin America by -5.4. Ifo’s Latin America index has plunged to its lowest level since 2009.

According to World Economic Survey experts, the expected negative impact of the Ukrainian crisis is affecting the neighboring countries, but not so much the nations further away. Ifo wrote “Experts in geographically distant regions like Latin America, Oceania, Asia and Africa, by contrast, reported that the impact of the conflict is relatively minor.”

World Index

(Data source: CES-Ifo)

Inflation forecasts unchanged

Global inflation expectations, at 3.2%, remain unchanged. While inflation expectations have declined in Europe, in Asia and North America they have been revised upward.

WES experts believe long-term interest rates will rise over the next six months, “although somewhat less frequently than in the last survey.” They forecast short-term interest rates will remain largely stable during the next six months.

Ifo sees the Japanese yen and American dollar as being undervalued, while the British pound and the euro are overvalued.

The US dollar is expected to appreciate during the next six months.

World Economic Climate

(Data source: CES-Ifo)

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