It remains unclear whether the global economy will experience a soft landing. According to macroeconomist Edin Mujagic, economists worldwide are once again looking for clues this month. “It keeps people busy,” he says.
The desirable notes are piling up, Mujaki knows. The most recent clue comes from monthly figures from the Purchasing Managers’ Index. ‘These are surveys sent to the management of large companies in almost all countries,’ he explains. ‘They are being questioned about new orders, employment and things like that.’
According to Mujajic, the resulting index provides a good and reliable history when it comes to predicting how the economy will fare. “The index can provide a score from 0 to 100, with 50 being the cutoff,” he continues. “A score below 50 indicates that the sector is shrinking, and a score above that indicates growth.”
This means there is an economic downturn in most parts of the world. Germany, Japan, France, the rest of Europe, the United Kingdom and the United States have an index below 50.
“It means the economy is not doing well,” he says. Where the index is still above 50, the country is also on a downward trend. So that means we could end up in recession later this year.’
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Still, it’s not so bad, says Mujakic. On the contrary. “You can’t say it out loud, but it’s really good news,” he continues. ‘If inflation is a huge problem for many people and for the economy as a whole, if you want to fix it, it’s inevitable that the economy will grow less or not at all for some time.’
He admits it will be annoying in the short term, but insists the world won’t end after 2023. ‘So from a long-term perspective it’s good news,’ he concludes. “But the possibility of a soft landing — a scenario where inflation is beaten without leading to a recession — narrows during the week.”
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