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Economic Activity To Decelerate Significantly In 2022

GLOBAL
  • The rise in market uncertainty combined with the sharp tightening in financial conditions have led to a significant deterioration in leading economic indicators globally.
  • According to OECD ‘Diffusion’ Index, which looks at the percentage of countries with rising leading economic indicators (LEI), the business activity is expected to decelerate sharply in the coming 6 to 12 month.
  • The number of economic countries with rising LEI fell from over 90% in November 2021 to 25% in February 2022 (total of 39 countries).
  • The chart below shows that the OECD Diffusion index has strongly led the global manufacturing PMI (proxy for ‘real time’ economic growth) in the past 25 years (by 6 months).

Source: Bloomberg/MNI

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