CEOs across the globe are generally more upbeat about economic conditions, now and going forward. CEOs are particularly enthusiastic about their domestic markets compared to three months previous, although concerns around political conflicts, trade and transitions of political leadership remain.
The latest McKinsey & Company ‘Economic Conditions Snapshot, March 2017’ report finds that CEOs across the globe are increasingly optimistic about growth of the global economy and their domestic markets. The survey involved 1,742 CEO respondents across global regions and industry types.
The number of executives that feel global economic conditions have improved almost doubled on the previous survey and more than doubled on the survey at the same time last year. The latest results point to 4% of respondents that say conditions are substantially better than six months previous, 42% that say conditions are moderately better and 17% that say conditions are moderately worse.
Respondents are also considerably more upbeat about expected conditions six months down the line, with 3% of respondents believing conditions will be substantially better, 39% that say they will be moderately better and 24% saying that they will deteriorate in some way. The results are again a considerable improvement on last quarters result, when 28% projected improvement and 33% deterioration.
In terms of key concerns, ‘geopolitical instability’ ranks number one as a potential risk to global economic growth over the next 12 months, cited by 50% of respondents. The ‘transition of political leadership’ and ‘changes in trade policy’ follow, at 44% and 42% of respondents respectively. The slowdown in global trade comes in at number four, cited by 26% of respondents.
Other areas of concern for global growth include the Chinese slowdown, cited by 24%, the exit of one or more countries from the Eurozone, cited by 20% of respondents and an asset bubble, cited by 14% of respondents.
In terms of domestic conditions, a mixed bag is found between countries surveyed, although across all countries optimism has increased significantly on the previous quarter. In North America for instance, the number of respondents that say domestic economic conditions have gotten better compared to six months previous has increased from 51% of respondents to 58%, while in India the number has increased from 51% to 57%, while those that say conditions are worse fell from 34% to 22%.
European CEOs too see light at the end of the tunnel, with 44% noting better conditions, compared to 35% the previous quarter. Latin America and the Asia-Pacific are by far the most upbeat about results, whereby 44% in the former say that conditions are better, up from 20%, and 40% in the latter say that conditions are better, up from 13% late last year. The drastic change are in part inspired by
The research finds that in general, respondents in both developed and emerging economies are positive about the near-term outlook of their respective economies. In developed economies 49% of respondents say that economic conditions are improved on six months previous, compared to 38% of respondents from emerging economies.
Emerging economies are somewhat more upbeat about the future economic conditions in their respective regions, whereby 48% say that they expect things to get better in six months’ time, while in developed economies this comes in at 41%.
While geopolitical conflicts come in at the top of the list, the nature of those conflict differs considerably between regions. Latin America notes domestic political conflicts (54%) as the biggest risk to growth over the next 12 months, followed by North America on 52%. The Middle East too is concerned about domestic political conflicts, cited by 43% of respondents. Europe and India are a little less concerned, on 35% and 33% respectively. The Asia-Pacific region is the least concerned.
Changes in trade policy are largely concerns in North America, the Asia-Pacific and Europe, at 47%, 34% and 27% of respondents respectively. The trump administration is one of the key players creating uncertainty in the US, while in Europe, the Brexit negotiations are likely to create changed dynamics across the region. The transition of political leadership too is noted as an area of concern, particularly in Latin America (46%) and North America (35%)