The global economy has weakened slightly in the third quarter, mainly due to deceleration in Asia and Latin America, while North America shows signs of continuing recovery, according to a survey of more than 1,000 economists by the International Chamber of Commerce and the Munich-based economic research institute Ifo.
The survey's index dropped to 94.1 from 96.8 in the second quarter.
The ICC urged G20 leaders to take pro-growth steps at the upcoming G20 Summit in Saint Petersburg, Russia, such as agreeing to push through a final agreement on trade facilitation at the World Trade Organization by the end of the year.
The economists indicated that the global recovery has stalled and that if business conditions in Asia worsen, world economic growth will slow more.
In Asia, the Ifo economic index fell below its long-term average after a temporary boost in optimism last quarter, the ICC said. Most of the concern centers on China, where growth is in the 7-percent range after years of double-digit and near-double-digit growth.
The ICC poll suggests that the European Union's economy is beginning to stabilize with help from the European Central Bank. Economic expectations have reached a three-year high, boosting the area's economic confidence index to its highest level since late 2011. Only Slovenia and Cyprus expect continued economic decline. However, the overall economic climate is still below the long-term average.
ICC-Ifo survey respondents describe the economic situation as “poor” in France, Greece, Italy, Portugal, Spain and Cyprus. They are slightly more positive about Belgium, Ireland, Finland, the Netherlands and Slovenia. Germany and Estonia are the only economies to be scored as “satisfactory to good."
The survey indicated an expectation for inflation to increase at a 3.2-percent rate, unchanged from the previous quarter. Short-term interest rates, set by central banks, are expected to remain mostly stable, on average, during the next six months, but a growing number of analysts expect a rise in long-term interest rates, which are affected mainly by the capital market.
Survey participants expect the value of the U.S. dollar to grow moderately during the next six months and to appreciate against the euro.
The U.S. economy grew 1.7 percent in the second quarter, according to preliminary government estimates.
Last month, the International Monetary Fund estimated the global economy would increase by 3.1 percent this year, down 0.2 percent from its April forecast.
A slowdown in emerging economies is largely responsible for the more cautious figures. The IMF said developing economies are expected to grow by 5 percent this year, down from April's 5.3-percent estimate. Next year, emerging economies are forecast to grow by 5.4 percent, which is also down from the previous estimate of 5.7 percent.
All the BRICS countries — Brazil, Russia, India, China and South Africa — are expected to see slower than expected growth. Growth in China is forecast to be 7.8 percent, a downward revision of 0.3 percent.
The IMF predicts the U.S. economy will grow by 1.7 percent in 2013, a downward revision of 0.2 percent, and rebound to 2.7 percent next year. The euro area is expected to contract by 0.6 percent, a worsening of 0.2 percent from the previous estimate. - Eric Kulish