It is still not clear whether the global economy will experience a soft landing. According to macroeconomist Edin Mojacic, economists around the world are again looking for hints this month. “It keeps people busy,” he says.
Mojagek knows that coveted hints add up. The latest evidence comes from the monthly PMI numbers. “These are surveys that are sent to people in the management of large companies in almost all countries,” he explains. Then they are questioned about new orders, hiring and things like that.
“Based on PMIs, the economy is not doing well”
According to Mujagic, the resulting indicator gives a good and reliable history when it comes to predicting how the economy will perform. He continues: “The indicator can provide a score from 0 to 100, with 50 being considered the cutoff point.” A score below 50 means the sector is contracting, and a higher score indicates growth.
Preparation
This means that there is an economic slowdown in large parts of the world. In Germany, Japan, France, the rest of Europe, the United Kingdom and the United States, among others, the index scored below 50.
“This indicates that the economy is not doing well,” he says. As there is still an index above 50, this country is also in a downtrend. This suggests that we may end up in a recession later this year.
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However, it’s not bad, Mojácic says. on the contrary. “You can’t say it out loud, but it’s actually good news,” he continues. “If inflation is the biggest problem for a lot of people and the economy as a whole, and you want to fix it, you can’t avoid the fact that the economy will grow less or not at all for some time.”
future
He acknowledges that it will be annoying in the short term, but stresses that the world will not cease to exist after 2023. “This is good news from a long-term perspective,” he concludes. “But the potential for a soft landing — a situation in which inflation is beaten without triggering a recession — is getting smaller every week.”
