Our activity indicator fell into negative territory in February (-0.4), because of weaker economic indicators in all regions we cover, except for the USA. Barring investment, all components of our barometer saw declines of varying extents. Our inflation indicator fell sharply, from +1.1 in January to -0.3 in February, its lowest level since May 2017, partly due to lower oil prices.
While the USA is entering an extended phase of growth, Europe is enjoying a rapidly improving outlook and Japan is apparently recovering from two lost decades, emerging-market countries are struggling to keep up. Brazil and Russia have turned the corner after several years of recession, which means that average emerging-market growth rates are now higher than in the last two years. However, they are still disappointing. After a few encouraging months, the improvement in leading-activity indicators already seems to be fading. Exports of manufactured goods are benefiting only slightly from the upturn in global demand, while commodity exports are continuing to suffer from weak growth in export volumes and very varied price trends.
The situation seems not to be worrying observers or the markets, which are generally taking the view that the improving global outlook will eventually filter through to emerging-market countries. This is probably optimistic, given current trends. Indeed, there is a risk that disappointing performance in the developing world could drag down the global economy.