Important Information for Visitors

Privacy Policy    Disclaimer   Contact Us


© Copyright 2016 Topdown Charts Limited

The Cyclical Outlook: EM vs DM

July 17, 2019

Today's chart comes from the recently launched "Top 5 Charts Of The Week" report - which is our entry-level subscription service. 


The chart shows the OECD composite leading economic indicators, which I have aggregated for developed and emerging market countries (based on GDP weights).  There are a couple of clear and meaningful takeaways with this chart.

First: emerging markets appear to be turning the corner.  They were the first to rollover, and it seems they are now also the first to see a rebound in the cyclical outlook.  This is a very important development for the global economic outlook and goes against the seemingly widespread pessimism - with the consensus apparently looking for a global recession.


Second: developed economies are getting worse.  This does go against the optimistic tone I sounded in the previous paragraph, however I would note, that at least in 2016 - emerging markets turned first and lead developed economies into recovery/re-acceleration.


There's a few reasons why this makes sense: firstly emerging markets now account for the dominant share of world GDP; second, EM economies are typically more sensitive to the global cyclical pulse and shifts in financial conditions; thirdly, EM central banks are far from the zero-lower-bound, and hence have greater scope to stimulate their economies.


So with what on first glance looks like a fairly simple chart, there is a lot going on here, and I think this could even be contender for chart of the year.  But of course we will need to see how things unfold going into the second half.  I remain stubbornly optimistic on the global economic outlook and continue to preference over-weights to risk assets (albeit more opportunistically).


Again, if you'd like to subscribe to the Top 5 Charts report (where this chart came from), please click through and I will send you the latest report.



Callum Thomas


Head of Research at Topdown Charts Limited


Please reload

Follow us for updates:
  • Twitter Social Icon
  • LinkedIn Social Icon

Top 5 Charts Of The Week

Institutional Reports

-Weekly Macro Themes

-Global Cross Asset Monitor

-Monthly Chartbook

access our exclusive research for deeper insights:


>>  Become a Client  <<

Search By Tags
Please reload

Important Notice

We offer exclusive insights for institutional clients with our suite of multi-asset investment research reports, personalized service, & global perspective.

Take a trial today...

Become a Client