The global six-month and three-year economic expectations worsened significantly in July. Gauges assessing the economic outlooks fell to 0.44 and 0.58, a Dukascopy Bank SA poll showed. The current economic outlook was unchanged from the previous month at 0.43 points.
Respondents became less optimistic about Europe’s economic prospects for all three observed periods. The current, six-month, and three-year economic sentiment indices retreated to 0.18, 0.23 and 0.43 respectively.
North American economic outlooks deteriorated the most. The current economic outlook worsened 0.06 to 0.47, the six-month economic prospects fell 0.11 to 0.46, and the three-year economic sentiment erased 0.11 to 0.60.
The current economic outlook for Asia-Pacific gained 0.05 to 0.63, the six-month economic prospects were unchanged from the prior month at 0.63, and the three-year economic outlook lost 0.03 to 0.72.
Economic outlook (term structure)
Figure 3 presents the term structure of the Dukascopy Bank Sentiment Index (left-hand scale) mapped against GDP growth forecasts made by poll respondents (right-hand scale). Overall, DBSI values and GDP growth forecasts match directionally and respondents forecast the global economy will improve in three years.
Respondents expect the European Union to sink into recession by the end of this year. In the meantime, experts forecast the economy to improve significantly three years from now with a GDP growth rate of approximately one per cent in 2015.
Experts suggest that the North-American GDP growth rate will accelerate at the end of this year to 1.33 per cent and further to 1.93 per cent in 2015. The International Monetary Fund forecasts the world’s largest economy to expand 2 per cent this year.
The Asia-Pacific GDP growth forecast is around 3.9 per cent for 2012 and 4.1 per cent for 2015, a clear sign that despite the economic slowdown in China, the regional economy still outpaces its western peers.
Economic development stages
Figures 4, 5, & 6 present the current, six-month and three-year economic development stages for Europe, North America, and Asia-Pacific. On the figures, economic development stages are marked with bubbles (green - current EDS, blue - six-month EDS, red - three-year EDS). Each bubble represents a mode of a set of answers.
Respondents claim the European economy is teetering on the edge of recession and expect the economy to enter into initial recovery in 2015.
According to a survey, the U.S. economy is recovering from recession, albeit slowly. Respondents forecast that the U.S. economy will be somewhere between initial and early expansion stages three years from now.
The Asia-Pacific economy is expanding and will soon reach its peak, say experts. It is then expected to slow down, enter into recession and proceed to initial recovery which will take place in 2015.
Current economic outlook
Figure 7 shows the current economic outlook for Europe, North America, and Asia-Pacific. The global outlook remains at the lowest level since December 2011 and unchanged from June at 0.43, a survey showed.
Europe’s economic outlook slid 0.01 points to a record low of 0.18. Twenty seven experts (90%) rated economic performance as either “fairly” or “definitely” negative. Only three experts (10%) claim the current economic outlook is “neutral.”
Current North American economic prospects deteriorated to 0.47 in July from 0.53 in June. Nine experts claim economic conditions are either “fairly” or “definitely” negative, while only seven respondents are positive about the current economic outlook.
Current Asia-Pacific economic performance improved 0.05 points to 0.63 and standard deviation fell to 0.18, a sign experts became more united in the positive assessment of the regional economy. Eighteen respondents (60%) are optimistic about the current economic outlook, while only three (10%) claim the outlook is “fairly” negative.
Six-month economic outlook
Figure 9 shows the six-month economic outlook for Europe, North America, and Asia-Pacific. A poll conducted by Dukascopy Bank SA reveals that global six-month economic conditions (0.44) differ insignificantly from the curenct economic outlook (0.43).
The European six-month economic forecast slid by 0.01 points in July from 0.24 points in June. The majority of respondents (76%) believe that the six-month economic outlook is either “fairly” or “definitely” negative and six (20%) claim the outlook is “neutral”.
The North American six-month economic sentiment index tumbled by the most since November to a record low of 0.46, a clear sign the U.S. economy is expected to lose momentum sixmonths from now. A number of experts who are negative about the six-month economic outlook (30%) outweighed the number of respondents who expect the economy to improve (17%).
The Asia-Pacific six-month economic sentiment index was unchanged from June, when it lost 0.03 points to 0.63. July poll results reveal that a majority of respondents (53%) are “fairly” positive about the economic outlook and another 37% claim the outlook is “neutral.”
Three-year economic outlook
Figure 11 presents the three-year economic outlook for Europe, North America, and Asia-Pacific. Overall, Dukascopy poll results reveal that experts are more optimistic about long-term economic prospects. In the meantime, the global three-year economic outlook deteriorated for the first time in four months to 0.58 points, the lowest reading since November 2011.
Europe’s economic outlook for 2015 fell 0.08 points to 0.43. Six respondents (20%) claim the economic prospects are “fairly” positive, fourteen (47%) believe the outlook is neutral, and the rest (33%) are pessimistic about the economic performance three years from now.
The North American economic forecast for 2015 tumbled 0.11 points to 0.60 in July from June and standard deviation rose 0.05 points to a significant 0.28, a sign experts became more divided in the assessment of the North American economy.
Poll respondents are the most optimistic about Asia-Pacific economic performance three years from now with a sentiment index value of 0.72 points, down from 0.75 points in June. An absolute majority of experts (73%) believe the long-term economic prospects are either “fairly” or “definitely” positive.
Economic outlook comparison
Figure 13 presents a discrepancy in views on economic outlook among local and foreign experts. July’s poll results reveal that respondents from Europe are more confident about the prospects of their economy, compared to foreign respondents.
Europe: Experts from Europe are significantly more confident about the regional economic outlook for all three observed periods than their foreign colleagues, with a discrepancy in views of 0.10 points for all three observed periods.
North America: In July, Americans were more confident about the current economic performance than their colleagues from overseas. The difference in opinions shed to -5 for the six-month economic outlook and jumped back into positive territory to 0.04 for the three-year economic outlook.
Asia-Pacific: Respondents from Asia-Pacific are less optimistic about the current economic outlook (0.63), compared to experts from overseas (0.64). The discrepancy widens to -0.05 points for the six-month economic outlook and further to -0.06 points for the three-year economic prospects.