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August Release of Dukascopy Bank Sentiment Index
The six-month and three-year global economic expectations worsened in August, a Dukascopy Bank SA poll showed. The six-month economic sentiment index fell 0.06 to 0.53. The three-year economic outlook declined 0.01 to 0.65.
The European six-month economic outlook slid 0.01 to 0.41. The three-year economic prospects improved to 0.56, from 0.51 in July when they deteriorated 0.07.
The North American economic outlooks also worsened. The six-month economic sentiment index retreated 0.05 to 0.66 and the three-year economic outlook fell to 0.71, the lowest level in 10 months.
The Asia-Pacific six-month economic expectations tumbled 0.12 to 0.53, the lowest reading since November 2011. The three-year sentiment index declined to 0.69 from 0.73 in July.
Figure 3 presents the term structure of the Dukascopy Bank Sentiment Index (Y-axis) mapped against GDP growth forecasts made by poll respondents (X-axis). Overall, DBSI values and GDP growth forecasts match directionally, suggesting the global economy will perform better three years from now.
Poll respondents suggest that the European economy will contract an annualized 0.10% in the next six months and will expand 0.90% three years from now.
Respondents revised the North American six-month and three year economic growth forecasts to 1.17% and 1.87% in August, from 1.87% and 2.34% respectively in July.
The Asia-Pacific economic sentiment remains subdued, despite strong growth projections (compared to other regions). Experts forecast growth of 2.70% and 3.73% six months and three years from now respectively.
Figure 4 presents the business cycle and its phases - expansion (real GDP is increasing), peak (real GDP stops increasing and begins decreasing), contraction or recession (real GDP is decreasing), and trough (real GDP stops decreasing and begins increasing).
More than a half of the respondents (22) suggest the European economy is in a recession. Twenty claim that the economy will be expanding three years from now.
Experts from academia are largely united about North America economic development stages - twenty four say that the regional economy will be expanding both six months and three years from now.
Experts are united about the Asia-Pacific 3-year EDS - 25 experts forecast expansion, 1 say the economy will reach its peak and 4 claim the economy will slide into a recession.
Figure 5 shows the six-month economic outlook for Europe, North America, and Asia-Pacific. The global six-month economic sentiment index declined to 0.53, the lowest level since December 2012.
The European six-month economic sentiment index slid 0.01 to 0.41. Thirteen respondents (43%) are pessimistic about the economic outlook, fourteen (47) say the outlook is “neutral” and only three (10%) claim the outlook is “positive”.
The North America six-month economic prospects also worsened. The sentiment index decreased 0.05 to 0.66 - twenty experts (66%) claim the outlook is “fairly” or “definitely” positive and eight (27%) suggest the economic outlook is “neutral”.
The Asia-Pacific sentiment index plunged to 0.53 from 0.65 in July with experts being strongly divided about the six-month outlook. Twelve respondents (40%) are either “fairly” or “definitely” positive about the six-month economic outlook, while eleven (36%) suggest prospects are either “fairly” or “definitely” negative.
Figure 7 presents the three-year economic outlook for Europe, North America, and Asia-Pacific. The three-year global economic outlook worsened for a third consecutive month to 0.65 from 0.66 the prior month.
The three-year European economic sentiment index gained 0.05 to 0.56 in August. Thirteen respondents (43%) say the outlook is “fairly” or “definitely” positive. Twelve (40%) claim that the three -year economic outlook is “neutral” and five (17%) say that the outlook is negative.
The North American three-year economic prospects deteriorated 0.02 to 0.71 in August, the lowest level in nine months. An absolute majority of respondents (84%) say the long-term economic outlook is either “fairly” or “definitely” positive and four (13%) claim prospects are negative.
The Asia-Pacific economic sentiment index declined to 0.69 from 0.73 the previous month. Nineteen experts (63%) say prospects are “fairly” or “definitely” positive.
