The Paris-based International Chamber of Commerce (ICC) and the Munich-based Ifo institute for economic research have released findings, which conclude that the “world economy is showing signs of brightening after six months of stagnation.”
“The latest ICC-Ifo World Economic Survey (WES) shows a climate indicator of 94.1 for the first quarter of 2013, up from 82.4 at the end of 2012 after two quarters of decline. The new global rise was driven by a significant increase in experts’ optimism for the six-month economic outlook. Meanwhile, assessments of the current economic situation improved only slightly.”
ICC Secretary General Jean-Guy Carrie, while encouraged by the findings, remained cautious. “While the signs of a renewed economic optimism are a boost to confidence, fresh approaches by government and business are still urgently needed to drive economic growth,” he said.
Ifo said positive business data from China and the US, after the first fiscal cliff had been averted, had helped lift the gloom. Another comfort was European Central Bank President Mario Draghi’s pledge last year to do “whatever it takes” to protect the euro zone from collapse.
The survey found that the “sharpest improvement in economic climate was seen in Asia, where the ICC-Ifo economic climate indicator rose above its long-term average. Since the end of 2012, experts have become more upbeat about Asia’s economic situation and expectations have surged.
“The economic indicator for North America rose too, mainly due to the view that the current economic situation had improved, although it was still ‘not completely satisfactory.’”
Even the recently stagnant euro zone seems to be recovering. Hans-Werner Sinn, President of the Ifo institute, said: “Assessments of the euro zone’s six-month economic outlook are now at their most positive for nearly two years which signals a glimmer of hope for the euro area’s economic situation.”
Overall, the survey showed the economic climate in Western euro areas to be poor but improving. This is mainly because of significantly brighter six-month expectations – in all euro countries apart from Estonia.
Survey respondents described the economies of Greece, Italy, Portugal, Spain and Cyprus as “ailing”, only slightly behind their euro neighbors. Only Germany and Estonia received positive assessments.
The survey also sought data on inflation. It questioned 1,169 economic experts in 124 countries, which “gave a global average inflation estimate of 3.3 percent for 2013, down from 3.6 percent last year. Estimates for the euro area fell to 2.1 percent for 2013, from 2.4 percent last year. Short-term interest rates, set by central banks, are expected to remain largely unchanged over the next six months. And long-term interest rates, those affected mainly by the capital market, look set to rise only slightly.”
Those who participated in the survey also indicated that they expect the value of the US dollar to grow moderately over the next six months and the euro/US dollar exchange rate to remain stable.
The ICC also posed a special question in the survey, which “revealed a broad worldwide consensus on the economic importance of small and medium-sized enterprises (SMEs). Support was particularly strong in Europe where, according to the European Commission, SMEs provide two thirds of private sector jobs and account for 99 percent of all European business. Nearly all WES experts surveyed in Western Europe see a substantial and healthy SME sector as ’essential for the national economy.’”
Economic experts were also asked if SMEs’ access to bank credit had been troubled by the global financial crisis. “The answer was primarily yes in North America, Eastern and Western Europe, Oceania and the Commonwealth of Independent States. Meanwhile, in areas less directly affected by the crisis – Asia, Latin America, Africa and the Near East –SMEs had faced some difficulty in obtaining bank credit, but the problem was less pronounced.
“Survey analysts pointed out that the short supply of bank credit, mainly in Europe, was a heavy constraint not just for SMEs, but for entire economies, particularly Italy, the UK, Hungary, Albania, Slovenia, Portugal, Ireland, Romania, Spain and Greece.”
Source: International Chamber of Commerce