Ifo: World economic climate suffers setback in Q3

The Ifo Index for the world economy fell by 4.5 index points to 86.0 in the third quarter, dipping to its lowest level in over three years at ten index points below its longterm average. These results, by the Munich-based the Ifo World Economic Survey (WES), contrast with the improvement seen last quarter.

Experts’ assessments of the current economic situation remain unfavourable, while their economic expectations are far more negative than last quarter. Sentiment in the world economy is subdued. According to WES experts, last quarter’s upward trend ground to a halt in nearly all regions. In Europe in particular the economic climate clouded over in the wake of the Brexit vote. The only exceptions to this rule were the Eastern European EU countries, where the climate brightened.

In Asia the climate indicator fell to its lowest level in seven years. In North America the index was only slightly higher than its long-term average. There was, however, an improvement to the economic climate in Latin America and the CIS states, although the index rose from a very low previous level.

Average short-term interest rates worldwide are expected to remain almost stable over the next six months, while long-term interest rates will increase in the second half of 2016. The US dollar is expected to strengthen over the next six months.