London /
Businesses and households in major economies are struggling to recover from the era of high inflation, as precarious growth prospects and political uncertainty weigh on their confidence.
Although economic activity remains strong, confidence indicators have fallen or remain stuck in negative territory, according to research by Financial Times.
The results of the indices monitoring the global economic recovery of Brookings-FT, or Tigersuggest that sentiment is the weak point of the global economy.
The United States presidential election and geopolitical turmoil, including conflict in the Middle East and the Russian invasion of Ukraine contribute to pessimistic sentiment.
“There is a sense of pessimism and uncertainty,” said Eswar Prasad, a senior fellow at the Brookings Institution. “The performance of trust indicators is very poor in countries that are doing well and in those that are not doing so well.”
The results come as policymakers and economists prepare to meet at the annual meetings of the International Monetary Fund (IMF) and World Bank in Washington next week.
In a speech before the meetings, Kristalina Georgieva, managing director of the IMF, warned that forecasts point to a “relentless combination of low growth and high debt: a difficult future.”
He stressed the need for governments to address their weakened public finances, but warned that the difficult economic context may hamper efforts to reduce debt levels.
The IMF will update its global growth forecasts next week, after predicting a global expansion of 3.2 percent in 2024 and 3.3 percent in 2025 in its July report. While the world is moving beyond the once-in-a-generation inflation crisis, there will be a lasting legacy on household incomes given rising prices, Georgieva warned.
While indicators of real economic activity rose in the US and China, confidence took a big hit and is still well below its long-term levels, the semi-annual index suggests. Confidence also took a hit in Japan and Germany.
Prasad said the fragility of confidence indicators not only reflects anxiety about whether the recovery will last, but also political uncertainty and the shadow of “festering geopolitical instability in many flashpoints.”
This came despite the fact that the US and Indian economies, in particular, remain “full steam ahead,” according to the index.
Indicators for other major economies, including Germany, are much less buoyant. Germany’s real activity gauge is now at its lowest level since 2020, when the pandemic forced economies to shut down around the world, and confidence is also well below its long-term level in the largest economy. large in the eurozone.
Germany is in its first two-year recession since the early 2000s, after the government on October 9 lowered its growth forecast for 2024.
Some confidence levels in the UK have risen, according to the Tiger Index, even as business leaders wait for Chancellor Rachel Reeves to clarify economic policies in her long-awaited October 30 Budget.
